Key points

  • The Fair Work Act 2009 (FW Act) commences operation from tomorrow and introduces major changes to employment laws which will affect all Australian businesses.
  • Do you fully understand how it will affect your business?
  • Is your business ready for the changes?

All employers should be reviewing all aspects of their workplace relations operations to ensure they comply with the new laws. This includes contracts of employment, position descriptions, policies and procedures, and practices such as agreement making.

The key changes to be aware of are:

  • All employers will be covered by unfair dismissal laws. The exemption for small businesses (with 100 employees or less) has been removed. A Fair Dismissal Code will apply, with compliance offering a defence for small (employers with less than 15 employees) employers.
  • Redundancies will be more difficult to implement. The test for what is a "genuine redundancy" is narrower and there is an obligation to explore redeployment opportunities – including with associated entities – before terminating a person's employment.
  • AWAs and ITEAs will be abolished (from 1 January 2010). The only option for employers in most cases to avoid the inflexibility of awards will be enterprise (collective) agreements.
  • Employers (and unions) must bargain in "good faith" when negotiating an enterprise (collective) agreement. This is potentially the most material change and strategies should be developed by employers to ensure compliance.
  • Greater role for unions in collective bargaining. In many cases, unions will be involved in bargaining in the workplace by default.
  • Increased union rights of entry. Unions will have a greater capacity to enter workplaces in which they have had no prior involvement.
  • More onerous transfer of business rules. Parties to sales of businesses and other transactions need to be aware of the new rules applying to the transfer of employees in these cases. The focus of the new rules is whether there has been a transfer of work between two employers and the reason for the connection between the two employers. The application of these rules is likely to be far wider than is presently the case and will have ramifications for both current and transferring employees.

Further changes take effect from 1 January 2010, introducing a new minimum "safety net" of employment entitlements comprising the National Employment Standards (applicable to all employees) and modern awards (applicable to employees by industry or occupation). The new modern awards will contain a flexibility clause which will enable an employer and employee to agree on arrangements to meet the genuine needs of both the employer and employee.

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.