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Changes to the Fair Work Act and the Productivity Commission final report
The passing of the Federal Government’s Fair Work Amendment Act 2015 has made a number of modifications to the Fair Work Act 2009 (FW Act) in relation to parental leave, greenfields agreements and protected action ballot orders.
The Government has also released the Productivity Commission’s final report into Australia’s workplace relations system. The Commission’s recommendations to the Government call for substantial changes to current laws, institutions and practices, having the potential to significantly affect Australian workplaces if implemented by the Coalition.
The Fair Work Amendment Act 2015
The Federal Government’s Fair Work Amendment Act 2015 was passed on 11 November 2015, introducing changes to the FW Act effective from 27 November 2015. The amendments respond to recommendations by the Fair Work Review Panel which reported to the former Labor Government in 2012.
Key changes include:
- Parental Leave – amendments provide an additional requirement where an employee requests an extension to his or her unpaid parental leave. An employer must now not refuse that request unless they first provide the employee with a reasonable opportunity to discuss the request;
- Greenfields agreements – employers will now be allowed to submit greenfields enterprise agreements to the Fair Work Commission (FWC) for approval following a six-month “negotiating period”, where a deal has not been reached with a union; and
- Protected action ballot order – employees and unions will now be prohibited from applying for a protected action ballot order (required before undertaking protected industrial action) unless a bargaining period has been initiated.
Productivity Commission Final Report
On 21 December 2015, the Government released the Productivity Commission’s final two volume report, “Workplace Relations Framework” into Australia’s workplace relations system.
Terms of reference
In December 2014, the Government’s Terms of Reference for the inquiry included that required the Productivity Commission examine the operation and impact of current laws, institutions and practices; consider improvements; and make recommendations which recognise the balance between protecting workers and the need for a favourable environment for business.
The Final Report
The Productivity Commission made 69 recommendations in the Final Report, concluding that the current workplace relations system is “not systemically dysfunctional” but is in need of “repair not replacement”.
They key recommendations in the Final Report include:
- aligning Sunday penalty rates with those on Saturday to create a weekend rate for relevant industries including hospitality, entertainment and retail;
- toughening up sham contracting provisions in order to prevent employers escaping prosecution for representing that an employment contract is a contractor agreement. The FW Act currently provides that an employer will not breach the sham contracting provisions if it shows that it did not know (and was not reckless as to) the true nature of the contract. The Final Report recommends that an employer be held to have breached the provisions where they could reasonably be expected to know that the contract was an employment contract;
- establishing a new form of employment arrangement known as an “enterprise contract” to benefit smaller businesses in providing for variations to modern awards suited to their individual circumstances;
- overhauling unfair dismissal provisions to reduce the occurrence of unfair and costly outcomes for employers. The recommendations include restricting the award of compensation only to cases where an employee has been dismissed without reasonable evidence of “persistent significant underperformance” or serious misconduct. Further, the Final Report recommends removing compensation and reinstatement as remedies where grounds exist to justify the termination but the employer has applied an unfair or flawed process;
- changing the general protections laws where an employee makes a complaint or inquiry in relation to their employment. The Final Report recommends that the subject of the complaint or inquiry must have a direct and tangible relation to the employee’s employment. It further recommends that costs orders be allowed where a dismissed employee pursues a general protections claim after being advised by the FWC not to do so;
- re-introducing the no-disadvantage test to replace the better off overall test for the approval of enterprise agreements;
- dividing the FWC into two new bodies. The FWC would continue its tribunal and administrative functions while a new body, the Workplace Standards Commission would be established to determine minimum wages and regulate awards;
- the FWC to have greater scope to order that an enterprise agreement not transfer where there is a transfer of business from one employer to another if that improves the prospects of employees transferring from the old to the new employer. The Final Report also recommends that an enterprise agreement apply to the new employer for only 12 months after the transfer except where the transfer of business involves employers which are associated entities;
- changes to industrial action provisions, including: a threefold increase in penalties for unlawful industrial action, simplified protected action ballots, the removal of the 30 day timeframe for industrial action, and enabling employers to deduct pay for strikes called off at the last minute.
The Government has not yet announced which of the Productivity Commission’s recommendations will be implemented as Government policy. However, the Government has identified that its key priorities arising from the Final Report will be:
- promoting jobs on productivity;
- providing incentives to prevent long term unemployment, particularly for youth;
- ensuring a future-focussed workplace relations system; and
- increasing women’s workforce participation.
In releasing the Final Report, the Government has announced that consultations with employees, employers, unions, social welfare groups and women’s groups in relation to the Productivity Commission’s findings will be held in early 2016. The Employment Minister has promised that any recommendations which are adopted by the Government will be taken to the upcoming federal election by the Coalition.