The Fair Work Bill was introduced into Parliament on 25 November 2008 and is currently before a Senate Committee which is conducting an inquiry. The legislation is expected to be passed in a form similar, but unlikely to be identical, to the Fair Work Bill, sometime after February 2009 with most key provisions due to take effect as of 1 July 2009.
The main terms and conditions of employment for national system employees under the Fair Work Bill 2008 are contained in the National Employment Standards (NES) with the minimum wages for such employees to be set by a Minimum Wage Panel of Fair Work Australia.
A national system employee is, generally speaking, an employee employed by a constitutional corporation.
Other terms and conditions will be contained in the modern awards, enterprise agreements and workplace determinations.
National Employment Standards
The NES contains minimum terms and conditions of employment for all national system employees. Our update in August 2008 provided information on the NES, which were released in June 2008.
The requirement on employers to comply with the NES is proposed to commence on 1 January 2010, that is, six months after the likely commencement of the other provisions of the Fair Work Bill.
An employer must not contravene a provision of the NES and, if it does, will be subject to a maximum penalty of $6,600 (for individuals) or $33,000 (for corporations) and any other order the Court considers appropriate. The orders that a Court may make in relation to a contravention of the NES includes an injunction to prevent, stop or remedy the contravention and reinstatement (if an employee's employment was terminated).
The NES are paramount. They cannot be excluded by a modern award or an enterprise agreement. However, a modern award or an enterprise agreement may contain terms that are ancillary or incidental to the operation of an NES providing it is not detrimental to an employee when compared with the NES.
There are 10 NES. A summary of each NES is set out below.
- Maximum weekly hours
This Standard is almost identical to the current Australian Fair Pay & Conditions Standard on the same topic, with additional considerations for what are reasonable additional hours and a reduction to the averaging period.
The standard hours of work for a full time employee are 38 hours per week and for an employee who is not a full-time employee, his or her ordinary hours of work in a week.
An employer is not permitted to request or require an employee to work more than his or her standard hours, and the employee may refuse to do so, unless the additional hours are reasonable.
In determining whether additional hours are reasonable or unreasonable, the employer must consider the same factors as currently exist under the Australian Fair Pay and Conditions Standard as well as:
- whether the employee is entitled to any overtime, penalty rates or other compensation that reflects the additional hours to be worked;
- the usual patterns of work in the industry in which the employee works;
- the nature of the employee's role and level of responsibility; and
- whether the additional hours accord with the averaging terms of a relevant modern award.
For non-award employees, an employer and an employee may agree to average the 38 hours over a period of not more than 26 weeks.
- Requests for flexible working
This is likely to be a new obligation for most employers (if it currently exists it may be under an industrial instrument or it may have been considered in the context of fulfilling obligations under anti-discrimination legislation).
An employee will be entitled to request a change in his or her working arrangements if he or she is a parent, or has a responsibility for the care, of a child under school age. The requested change must be to assist the employee to care for the child.
A permanent employee may make the request if he or she has completed at least 12 months of continuous service with the employer. A casual employee may make a request if he or she is a long term casual employee (having over 12 months service) and has a reasonable expectation of continuing employment on a regular and systematic basis.
The request must be in writing and contain details of the change sought, and of the reasons for the change. The employer must then inform the employee in writing, within 21 days, whether the request is granted or refused. The request may only be refused on reasonable business grounds and, if the request is refused, the employer must include the reasons for the refusal.
The NES does not give any guidance on what would constitute "reasonable business grounds".
The NES also gives examples of what might constitute changes in working arrangements – such as changes in hours of work, changes in patterns of work and changes in location of work.
- Parental leave and related entitlements
The entitlement to unpaid parental leave under the NES generally reflects those entitlements that currently exist under the Australian Fair Pay & Conditions Standard.
The right to take parental leave is available for permanent employees who have completed at least 12 months service immediately before the expected date of birth of the child. Long term casual employees are also entitled to parental leave providing they would have a reasonable expectation of continuing employment on a regular and systematic basis.
Parental leave has also been extended to same sex couples.
An employee will also now have the right to request an extension to their period of leave for a further 12 months. The employee will be required to provide their employer with 4 weeks notice and the employer may only reject the request if there are reasonable business grounds to do so. The employer must give written reasons within 21 days if it rejects an employee's request.
There is also a new obligation on an employer to consult with an employee on unpaid parental leave if the employer makes a decision that will have a significant effect on the status, pay or location of the employee's pre-parental leave position. The employer is required to take all reasonable steps to give the employee information about, and an opportunity to discuss, the effect of the decision on the pre-parental leave position.
The NES does not contain provisions relating to parental leave replacement employees. However, it retains the entitlement to return to the employee's pre-parental leave position or, if that position no longer exists, to an available position for which the employee is qualified and suited nearest in status and pay to the former position.
- Annual leave
The NES provides for an employee to have 4 weeks of paid annual leave and, in the case of a shift worker under a modern award, 5 weeks paid annual leave. This quantum remains unchanged from the Australian Fair Pay and Conditions Standard.
The leave will accrue progressively during a year of service according to the employee's ordinary hours of work and will accumulate from year to year.
The annual leave is to be taken at a time agreed between an employee and employer. However, the employer cannot unreasonably refuse to agree to a request by an employee to take leave. An award may provide for an employer to require an employee to take leave in particular circumstances but only if the requirement is reasonable. An employer may require an award free employee to take leave also but only if the requirement is reasonable.
The cashing out provisions have been extended from the Australian Fair Pay & Conditions Standard. For award employees, paid leave cannot be cashed out except in accordance with a permitted cashing out term in an award or enterprise agreement. An award free employee and his or her employer may agree to cash out the leave providing the employee's remaining accrued entitlement is not less than 4 weeks. Such an agreement must be a separate agreement in writing.
- Personal/carer's leave and compassionate
The entitlement to personal/carer's leave under the NES generally reflects those entitlements that currently exist under the Australian Fair Pay & Conditions Standard.
Permanent employees will be entitled to 10 days of paid personal/carer's leave for each year of service. The entitlement accrues progressively during the year according to the employee's ordinary hours of work and accumulates from year to year.
The leave may be taken:
- because the employee is not fit for work because of a personal illness, or personal injury, affecting the employee, or
- to provide care or support to a member of the employee's immediate family, or a member of the employee's household, who requires care or support because of:
- a personal illness, or personal injury affecting the member; or
- an unexpected emergency affecting the member.
All employees, including casuals, who have no entitlement to take carer's leave, may take unpaid carer's leave for each permissible occasion.
The entitlement to 2 days paid compassionate leave (except for casuals) is also maintained for each occasion when a member of the employee's immediate family, or a member of the employee's household:
- contracts or develops a personal illness or sustains a personal injury that poses a serious threat to his or her life; or
An employer may require an employee taking leave to provide evidence that would satisfy a reasonable person that the leave was necessary.
- Community service
This obligation again may be new to some employers as it is not part of the Australian Fair Pay & Conditions Standard. To other employees it may be similar to or, the same, as industrial instrument provisions which currently bind them.
An employee who engages in an eligible community service activity is entitled to be absent from work for the time when the employee is engaged in the activity and for reasonable travelling and rest time. The absence must be reasonable in the circumstances. An eligible activity includes a voluntary emergency management activity with a recognised organisation (such as a fire-fighting, civil defence or rescue body).
An employee wanting absence from work to undertake an eligible community service must provide notice to his or her employer that would satisfy a reasonable person that the absence relates to the community service proposed to be taken.
An employee is also entitled to be absent from work to attend to jury service. This absence is paid for the first 10 days (except for casuals).
- Long service leave
The NES preserves the entitlement of employees to long service leave in accordance with prevailing State legislation or applicable awards.
- Public holidays
An employee will be entitled to be absent from work and be paid on a day or part-day that is a public holiday in the place where the employee is based for work purposes. A public holiday remains those days commonly declared as such around Australia including any other day declared by a State government to be a public holiday.
However, an employer may request an employee to work on a public holiday if the request is reasonable. The employee may refuse such request if the request is not reasonable or the refusal is reasonable. The NES lists circumstances that must be taken into account in determining whether a request, or a refusal of a request, to work on a public holiday is reasonable.
- Notice of termination and redundancy pay
Notice of termination
The proposed NES provides for the same minimum notice periods to be afforded to employees as the Workplace Relations Act currently provides for on the termination of their employment. The NES confirms the requirement for the notice of termination of employment to be in writing.
Significantly, the NES will introduce for the first time a statutory entitlement to redundancy pay for permanent employees whose employer employs 15 or more employees (including certain casual employees). The entitlement to redundancy pay reflects the AIRC standard, which is the following scale of between 4 and 16 weeks depending upon the employee's period of continuous service with the employer:
Redundancy pay period Employee's period of continuous service with the employer on termination Redundancy pay period 1 At least 1 year but less than 2 years 4 weeks 2 At least 2 years but less than 3 years 6 weeks 3 At least 3 years but less than 4 years 7 weeks 4 At least 4 years but less than 5 years 8 weeks 5 At least 5 years but less than 6 years 10 weeks 6 At least 6 years but less than 7 years 11 weeks 7 At least 7 years but less than 8 years 13 weeks 8 At least 8 years but less than 9 years 14 weeks 9 At least 9 years but less than 10 years 16 weeks 10 At least 10 years 12 weeks
There are the usual exclusions such as casuals, employees employed for a specific period of time or for a specific task and qualifying period employees (the Bill refers to a "continuous period of service" rather than qualifying period and this will be 6 or 12 months depending on the size of the employer). The NES will also not apply where there is a transmission of business and the employee accepts employment with the new employer, or rejects an offer with the new employer which would recognise their service with the old employer on terms and conditions substantially similar to, and no less favourable, than those applying with the old employer.
- Fair Work Information Statement
The NES requires the proposed new industrial umpire – Fair Work Australia – to publish a statement called the Fair Work Information Statement which must be given to all new employees before, or as soon as practicable after, the employee starts employment.
The Statement is required to contain information about the following:
- the National Employment Standards;
- modern awards;
- agreement making;
- the right to freedom of association; and
- the role of Fair Work Australia and the Fair Work Ombudsman.
Minimum wages will now be set by the Minimum Wage Panel of Fair Work Australia.
For award employees, the minimum wages will be contained in the modern awards. For award free employees, the minimum wages will be specified in the national minimum wage order.
Fair Work Australia will be required to establish and maintain a safety net of fair minimum wages taking into account certain social and economic factors. Wage reviews will be undertaken annually and will also set the casual loading for award free employees.
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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.