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The New Workplace Laws: A Natural Progression

In many respects, the proposed changes to Australia’s workplace laws announced by the Federal Government on May 26 are nothing more than the natural ‘next step’ in the law reform process commenced by the Hawke/Keating government in 1993.

Despite this, as we have already seen, they are being and will continue to be vigorously opposed by the union movement. That opposition will almost certainly be long-running, given that the reforms are likely to take many months to be implemented.

While the Federal Government’s changes have been reasonably prescriptive, for most of the foreshadowed changes, draft legislation has not been released. We expect that many of the significant changes will be contained in legislation introduced in the August/September sitting of federal parliament, with legislation coming into effect in early 2006.

Main changes

The main changes proposed by the Commonwealth include:

• establishing a Fair Pay Commission (thus removing wage setting powers from the Australian Industrial Relations Commission) to set minimum award wages and determine casual loadings

• further simplifying awards by removing jury service, notice of termination, long service leave and superannuation

• establishing a taskforce to rationalise awards and award classifications

• establishing four minimum legislative conditions of employment (namely, annual leave, personal/carers’ leave, parental leave and ordinary hours of work), which along with minimum award wages will become known as the Pay and Conditions Standard

• applying the Pay and Conditions Standard as the benchmark for the application of the ‘no disadvantage’ test for AWAs and certified agreements. This will replace the requirement that certified agreements satisfy the ‘no disadvantage test’ against all conditions in a relevant award

• requiring collective agreements to be vetted by the Office of the Employment Advocate (OEA), rather than the AIRC

• commencing agreements immediately they are lodged with the OEA and extending the nominal life of EBAs and AWAs to five years, rather than three years

• modifying industrial action laws to further limit when ‘protected’ industrial action can occur and to increase the ability of those affected by industrial action to obtain orders prohibiting that action

• moving to a single system of workplace relations laws by asking the States to refer that power to the Commonwealth Parliament or, if the States resist that request, using the corporations power in the Australian Constitution to establish that single set of workplace relations laws

• implementing a single national law on union right of entry

• creating one unfair dismissal system

• exempting businesses with 100 or less employees from unfair dismissal laws

• extending the qualifying period for being entitled to claim unfair dismissal from three months to six months

• exempting small business from making redundancy payments (the definition of ‘small business’ in this context is still to be confirmed)

• clarifying laws concerning the use of independent contractors and labour hire workers

• establishing the Australian Safety and Compensation Council to oversee the implementation of national OH&S standards and to pursue a national approach to workers’ compensation

• removing ‘industrial’ barriers to the take-up of school-based apprentices and part-time apprentices, and

• implementing changes to the regulation of workplace law in the construction industry.

How employers will be affected

This long list of changes can be distilled into 10 key changes in workplace relations:

1. For all employers, an employee with less than six months’ service will not be able to bring an unfair dismissal claim. For employers with 100 employees or less, no employee will be able to bring such claims. Other post-termination avenues for bringing claims will remain (eg. discrimination and breach of contract claims) but the number of termination-related claims will fall.

2. It will be easier to modify award conditions with the employees’ agreement.

3. Union officials will have greater restrictions imposed on their right to enter work sites and their ability to take and maintain protected industrial action. Employers accustomed to state industrial relations systems will however find it more difficult to seek the intervention of industrial relations commissions to help them resolve their disputes.

4. Award conditions will be less complicated, particularly if classification structures are significantly rationalised after the proposed review is concluded in mid-to-late 2006.

5. Employers operating in more than one state will have to comply with fewer laws.

6. Workers engaged as independent contractors are more likely to be treated as such by industrial tribunals, rather than as employees.

7. Restrictions on using labour hire workers will be largely outlawed, even if such restrictions are part of an enterprise agreement.

8. There should be more and clearer OH&S standards.

9. Hopefully, there should be more consistent workers’ compensation laws throughout the country. However, if the cost of the currently indebted NSW system is shared across the nation, employers based outside NSW may not see a benefit.

10. There should also be an increase in the number of apprentices.

Employee/union concerns

The main concerns that unions and employees are likely to raise are:

• Denying unfair dismissal rights to employees whose enterprise employs 100 people or less. It should be noted though that such employees will still be able to contest claims if the reason for their dismissal is based upon their age, gender, marital status, union membership and other prohibited reasons. However, a dismissal which is unfair because of the lack of a fair pre-termination process, or that was based upon an unreasonable (yet not unlawfully discriminatory) cause will not be able to be challenged. Further, if appropriate grouping provisions are not contained in the legislation, employers of more than 100 employees may be able to avoid the unfair dismissal laws by re-organising their enterprises into a variety of companies, each of which employs 100 or less workers.

• That the modification of the ‘no disadvantage test’ for AWAs and certified agreements will mean that such agreements could provide conditions that are less beneficial than those contained in the relevant underpinning award. The reason for this is that the AWA or certified agreement will be measured against five standards rather than all relevant award and legislative standards, of which there are more than 20 at present.

• The fact that unions will be limited in their ability to enter a site without the employer’s consent. Further, the ability of unions and employees to strike will be subject to additional limitations, the most significant of which may be the requirement that a secret ballot precedes any industrial action.

• In the area of contractors, the changes might be criticised as allowing unconscionable arrangements to proliferate through the use of independent contractor agreements. It is hard to determine at this stage whether such concerns have any foundation. However, if those workers who are truly open to exploitation (such as clothing outworkers) continue being protected, changes to remove the uncertainty surrounding the engagement of contractors should advantage all parties.

• The foreshadowed changes will prevent employees and unions from negotiating with employers to prohibit or restrict the use of labour hire workers. Unions and employees may see this as allowing employers to engage such workers on lesser conditions than those provided by collective agreements.

Possible employer responses

There are various responses that employers can make to reduce employees’ concerns about the Government’s proposed changes. These include:

• Employers will continue being careful and considerate when making decisions about dismissals, thereby ensuring that good staff are attracted, retained and motivated to be productive

• Whilst technically-speaking an AWA or certified agreement may be able to reduce conditions below those of award and legislative minimum conditions, employers who offer such conditions will not be able to attract or retain employees. Further, it will be difficult for them to achieve high productivity from employees who are unfairly remunerated

• At the vast majority of workplaces, industrial action is considered by both employers and employees to be a last resort in resolving disputes. However, if employees feel that industrial action is warranted, they will still be able to voice that concern through industrial action taken in the course of negotiating an enterprise agreement. What won’t be possible is for a strong union official, or vocal minority in the workforce, to lead industrial action without a true majority of the workforce’s support for the action

• On the issue of labour hire, an efficient workforce that knows its employer’s business will always be more attractive to that employer than outside casual workers

• These changes will create jobs and this will help secure the future of all employees and their families.