Australia: The Fair Work Act 2009 At A Glance

Last Updated: 22 September 2009
Article by Morry Bailes and Richard Yates

The Commonwealth government's Fair Work Act 2009 is due to commence on 1 July 2009. This Act will replace the current Workplace Relations Act 1996 and create a new Industrial Relations system in Australia. At six hundred and eight pages, the Fair Work Act is no light reading and what follows is a brief summary of the major changes.

The Commonwealth Fair Work Act will apply to employers who are currently covered by the Workplace Relations Act. Generally speaking this will not include sole traders, trusts and partnerships who will continue to fall within the State system (confusingly also called the Fair Work Act!). There is some suggestion the scope of the commonwealth Act will be extended to all employers, but as yet the South Australian government shows no sign of willingly handing over it's powers to Canberra.

The Act will see ten minimum conditions of employment imported into every employment relationship covered by the Act (called the 'National Employment Standards'(NES)). They are:-

  1. a maximum working week of 38 hours plus reasonable overtime
  2. a right to request flexible working arrangements. A request can be declined by an employer on 'reasonable business grounds'
  3. 12 months unpaid parental leave and a right to request an additional 12 months.
  4. 4 weeks annual leave, or 5 weeks in the case of shift workers
  5. 2 weeks sick leave / carers leave
  6. community service leave (eg 2 weeks for jury duty)
  7. long service leave as defined by Award/Agreement or state Act
  8. right to have public holidays off work unless 'reasonable' for employer to request employee work on a public holiday
  9. legislated minimum redundancy payments
  10. a Fair Work information statement must be given to all new employees

Various existing tribunals and commissions will be replaced by a 'one stop shop' called Fair Work Australia (FWA). FWA will have the responsibility for making Awards, approving Agreements, determining minimum wages, hearing industrial disputes and unfair termination claims. The Fair Work Ombudsman will be established to largely perform the investigative role of the current Workplace Ombudsman.

The process towards Modern Awards will continue under the new Act. The 5,000 or so NAPSA's (preserved state Awards) and Federal Awards currently in force across Australia will reduce to around 150. Some provisions of Awards can be varied in a particular employee's case with the written agreement of the employer and employee if the variation is more beneficial to the employee. Modern Awards will include the conditions of employment including pay rates, reverting back to the position pre-Workchoices.

ITEA's, the rebadged AWA's, are out the window from 31 December 2009. Enterprise Agreements are back in vogue. They must be negotiated with the relevant union or representative of the employees. Even when the union is not involved in the negotiations process they can apply to FWA to be a party to the agreement. All bargaining must be in good faith, and FWA can make Orders to satisfy this requirement (eg ordering an employer to attend meetings). In the event a negotiated Agreement is not possible, FWA may act as arbitrator and impose a determination on the parties.

Enterprise Agreements can supplement but not contradict the NES. The Agreement must be beneficial to all employees when compared to the Award. The agreement must not contain prohibited content, for example seeking to oust Occupational Health and Safety requirements or unfair termination provisions.

Unfair termination makes a bit of a comeback with employers with more than 15 employees being subject to claims (down from 100 employees). Employees will need to be in employment for six months (more than 15 employees) or twelve months (less than 15 employees) to lodge a claim. An employee can make a claim in the case of a redundancy if it was reasonable for the employee to be redeployed in the business rather than made redundant. The remedies include reinstatement orders or up to six months salary.

The new laws mark a move away from individually negotiated contracts to collective agreements. The full effect will be seen in time. In the meantime, members are encouraged to review their employment arrangements to make sure they conform to the new rules, particularly the National Employment Standards.

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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