Article by Murray Procter and Katie Hegarty
Since 1 July 2009, there has been a flurry of activity in the area of workplace relations, as various provisions of the Fair Work Act 2009 (Cth) (the FW Act) commence. This article discusses five key areas of workplace relations specifically affecting the hospitality industry – the National Employment Standards, award modernisation, low paid bargaining, unfair dismissal and transfer of business.
Minimum conditions of employment will be regulated under the FW Act by two mechanisms: the National Employment Standards and Modern Awards.
1. The National Employment Standards (NES)
The NES are 10 minimum conditions of employment which apply to all employees of companies.
The NES replace the Australian Fair Pay and Conditions Standards and will come into effect on 1 January 2010. The NES are made up of the following 10 standards:
- maximum weekly hours of work (38, plus reasonable additional hours);
- notice of termination and redundancy pay (based on length of service);
- a right to request flexible working arrangements (to care for pre-school aged children or children with disabilities);
- parental leave (12 months unpaid, plus a right to request further unpaid leave);
- annual leave (4 weeks per year);
- personal/carer's leave and compassionate leave (10 days paid personal leave per year);
- community service leave (unpaid);
- long service leave;
- public holidays (a right not to work on a public holiday); and
- provision of a Fair Work Information Statement.
2. Award modernisation
In addition to the NES, modern awards will set minimum terms and conditions for employees within a given industry or on the basis of the occupational category of the employees. The key modern awards applicable to the hospitality industry are:
- Hospitality Industry (General) Award 2010
- Registered and Licensed Clubs Award 2010
- Food, Beverage and Tobacco Manufacturing Award 2010
- Fast Food Industry Award 2010
- Security Services Industry Award 2010
- Cleaning Services Award 2010
- Restaurant Industry Award 2010 (draft)
These Modern Awards are available on the Australian Industrial Relations Commission website, www.airc.gov.au. To determine which award applies, employers should look at each of the awards' "Coverage" clauses. Usually, the Coverage clause will refer to an "industry", which is separately defined. If the employer's business fits the industry definition, the next step is to consider the "Classifications". If the business fits the "industry" and an employee performs work in one of the "Classifications", then the Award will cover the employee.
Modern Awards contains terms and conditions such as minimum rates of pay, overtime, penalty rates and various allowances such as for shift work. Some terms of Modern Award won't apply to employers currently subject to industrial instruments such a collective agreements.
3. Low-paid bargaining
Another feature of the FW Act is the provisions dealing with "low-paid bargaining". That is, the FW Act gives Fair Work Australia general powers of arbitration in relation to certain categories of low-paid workers, for example those workers in the security and cleaning industries.
Fair Work Australia can make orders allowing unions to negotiate multi-enterprise agreements covering two or more employers in certain low-paid industries. If those negotiations break down, it is possible for Fair Work Australia to impose a workplace determination on the employers.
To date the Liquor, Hospitality and Miscellaneous Union has been active in using the provisions across the country, including to attempt to make a national agreement for the luxury hotel sector.
4. Unfair dismissal
There have been substantial changes to unfair dismissal laws from 1 July 2009. Two very important changes are:
- the "100 employees" exclusion has been removed and employers who employ less than 15 employees (excluding "true" casuals) must comply with the "Small Business Fair Dismissal Code" prior to dismissing an employee; and
- the exclusion for dismissals based on operational requirements has changed, requiring an employer in a redundancy situation to follow consultation obligations in the relevant industrial instrument and to try to redeploy the employee elsewhere in the business, or the business of a related body corporate.
5. Transfer of business
The transfer of business provisions require an employer to apply the industrial instrument of another employer if there has been a "transfer of business" between the employers. The test for a transfer of business is broad, and could involve an inadvertent transfer. There is a "transfer of business" if:
- employees of the old employer become employed by the new employer within 3 months after ceasing employment with the older employer;
- the work the employee performs for the new employer is substantially the same; and
- there is a connection between the old employer and the new employer established by:
- a transfer of ownership or beneficial use of assets;
- outsourcing or insourcing of work; or
- being a related body corporate.
This can raise the difficult situation where the new employer may be bound by different enterprise agreements, depending on the work of their employees. This could occur simply by an employee resigning from one employer and going to work for another employer in a group of companies.
An employer can apply to Fair Work Australia to avoid the operation of the transfer of business provisions, but Fair Work Australia must take a number of matters into account, including the effect on the employee.
Before 1 January 2010, employers need to come to grips with how the new minimum entitlements will affect them, including ascertaining whether one or more Modern Awards will apply. Also, employers should understand now how the unfair dismissal and transfer of business laws impact on their recruitment and termination practices.
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.