This service is a fortnightly news update providing succinct commentary on topical issues, analysis of recent cases, updates on legislative changes as well as issues for the transport industry. Where cases from outside Australia and New Zealand are discussed, we aim to explain the differences in approach in our jurisdictions.
The introduction of the Fair Work Act 2009 (Cth), associated regulations and a new industry-specific Award will result in significant changes to the labour arrangements of Australian ships and foreign ships operating within Australian waters. Specifically, Australian workplace relations laws will extend their coverage to include all vessels except for those foreign crewed ships which only intermittently operate in Australia.
Shipowners and employers should ensure their employment contracts and policies are up to date with the changes as penalties may apply for non compliance with the new laws from 1 January 2010.
Extension of Coverage
The division of the Fair Work Act 2009 (FW Act) which deals with minimum entitlements commences on 1 January 2010. During 2009 the Federal Government introduced the Fair Work Regulations 2009 (FW Regulations). These contained a definition of ships which had the effect of extending the coverage to include vessels which had not previously fallen within the scope of past industrial relations legislation.
The FW Regulations, when they commence on 1 January 2010, will include all ships:
- Operating under a licence.
- Operating under a continuing voyage permit (CVP) issued after 1 January 2010.
- Operating under a single voyage permit (SVP) issued after 1
January 2010, that has also been issued with either:
- A CVP in the 15 months preceding the date of issue of the SVP; or
- Two or more SVPs in the 12 month period preceding the date of issue of the SVP.
As a result, vessels which fall within the scope of these definitions, regardless of their country of origin, will be required to meet the requirements under the FW Act and the FW Regulations.
This change was developed to reflect the Federal Government's intent that all seafarers working regularly on vessels in Australian waters should have the benefit of Australian workplace relations laws and its safety net of employment conditions.
The majority of shipping to and from Australia is conducted by foreign flagged vessels. By including these vessels within the scope of Australia's workplace laws they will be required to conform to the FW Act. The portion of the FW Act dealing with the minimum entitlements for employees is also subject to the provisions of the relevant modern award.
The Seagoing Industry Award (Award) was recently drafted by the Australian Industrial Relations Commission (Commission) as part of the award modernisation process. The Award is a result of simplifying and streamlining state and federal awards for those operating in the 'seagoing industry' as defined.
Earlier this year, the Commission invited submissions from the public about the form of the Award and received detailed submissions from shipping operators, those organisations with a dependency on shipping and the relevant unions.
On 4 December 2009, the Commission handed down the final version of the Award. The Commission, in its Statement which accompanied the Award, recognised the significant change to the shipping industry as a result of the amendment to the coverage rules. As it only had a limited time in which to draft the Award the Commission elected to split the award into two categories: nonpermit ships (eg Australian ships) and permit ships (those operating under CVPs and certain SVPs).
The portion of the Award dealing with permit ships is to be delayed until 1 January 2011, allowing the Commission more time to consider and amend the Award. However, parts of the Award dealing with non-permit ships are due to commence on 1 January 2010.
Effect on the Shipping Industry
Australian vessels operating under an Australian licence will be required to conform to the Award which sets out, amongst other things, the minimum employment entitlements relating to minimum wages, leave, penalties, allowances, notice of termination and redundancy pay. Now is the time to review existing employment contracts, if you haven't already done so.
However the Commission has provided foreign ships, operating under permits within Australian waters, with a reprieve of approximately 12 months. The Award will then take effect and is likely to be amended during 2010. Those seeking to make submissions have an important opportunity to influence how the Commission drafts the portion of the Award dealing with permit ships.
After 1 January 2011, employers of crews on the applicable permit vessels will be required to provide at least the minimum entitlements stated in the Award. The evidence provided to the Commission during the award modernisation process suggests that this will significantly increase the labour costs on permit vessels. This marks a shift from the previously more limited application of Australian workplace laws to the shipping industry. Both providers and consumers of shipping services which rely on permits need to carefully watch, or be involved in, how the Award develops over the next 12 months.
Those operating non-permit vessels should take immediate steps to ensure that they are at least meeting the Award's minimum terms and conditions. These are likely to differ, at least in some material respect, from the previous award which applied.
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