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Australia: Impending Legislative Change

By Aaron Dearden, Partner

To the unitiated, employment law in Australia has always appeared confusing, not the least because of the combination of Federal and State laws, which can apply.

The Workchoices platform of the previous Howard Government simplified that situation to some extent, by using the Federal Government’s Corporations power to regulate many aspects of employment law for constitutional corporations.  In particular, this brought the general regulation of most terms and conditions of employment for corporations under the Federal Workplace Relations Act 1996 (the WRA).

There remain, however, significant aspects of employment regulation subject to applicable State law, including long service leave, public holidays, occupational health and safety and workers compensation.

The current Federal Rudd Labor Government was elected on a platform that included repealing many aspects of the WorkChoices amendments to the WRA, and claiming to restore rights to workers in the employment relationship.

The Rudd Government introduced transitional legislation in early 2008 which it claimed was the end of Workchoices. In reality, though, that transitional legislation did little other than to bring to an end the process for the making of statutory individual agreements, or AWAs.

The significant legislative reform of the Rudd Labor Government will most likely begin on July 1, with the rescinding of the WRA and the introduction of the Fair Work Bill 2008.  Some aspects of the latter will not start until early 2010.

The Fair Work Bill represents a significant realignment of the Australian employment scene.  It will continue to rely on the Federal Government’s Corporations power to regulate many aspects of employment law.  Some of the more significant changes include:

• The establishment of Fair Work Australia to replace the century old Australian Industrial Relations Commission, and various other regulatory bodies.  Fair Work Australia will encompass both the administrative arms and the tribunal aspects of matters arising under the FWB.  There will also be Fair Work Divisions of the Federal Court and Federal Magistrates Court.  Fair Work Australia is intended to be less formal than the current AIRC.
• An expanded statutory minimum set of conditions of employment, to be known as the National Employment Standard (NES).  The expanded conditions will include a minimum redundancy formula, and the ability for employees to request flexible working arrangements where they have children under school age.
• A system of “modern awards” prescribing minimum terms and conditions of employment in particular occupations and industries.
• Workplace agreements under the legislation will be collective agreements with employees or distinct groups of employees. Parties must bargain in good faith, and agreements must satisfy a “better off overall test” (the boot test) i.e. each employee must be better off overall under the agreement than if the relevant modern award applied.  Where bargaining is unsuccessful, Fair Work Australia will have certain powers to make workplace determinations to resolve the matter.
• Expanded access for employees to bring “unfair dismissal claims”.  The exemption for employers with fewer than 100 employees under the current WRA is removed.  Importantly, the “operational reasons” defence available to employees under the WRA will be replaced with a narrower “genuine redundancy” test.  There will, however, be a separate regime for small business, defined to be employers with fewer than 15 employees.  The qualifying period of service for employees of small business to bring an unfair dismissal claim will be 12 months, as opposed to the generally applicable six month qualifying period.
• Expanded rights for unions in areas such as right of entry to workplaces, access member and non member records and the bargaining process. The modern award process also has the potential to enhance union influence. 
• New rules will apply to the “transfer of business”.  This includes not just the purchase of a business, but outsourcing or in sourcing of work.

As with all new legislation, the introduction of the FWB adds an element of uncertainty to the Australian employment scene, including at this stage the unavailability of both the transitional provisions and the Regulations.

CONCLUSION

Employers operating in Australia will need a heightened sense of awareness for the next year or so to ensure compliance with the changing legislation, and to make sound decisions as the impact of the Fair Work Bill becomes clearer.