THE FAIR WORK ACT 2009 – WHAT DOES IT MEAN FOR EMPLOYERS

The following is an executive summary of the changes that you need to be aware of under the Fair Work Act 2009.

What you need to know after 1 July 2009.

From July 1, 2009, Fair Work Australia (FWA) took over from the Australian Industrial Relations Commission (AIRC) as the employment law watchdog with certain powers to regulate the relationships between employers and employees.

The Act provides for minimum conditions of employment under the National Employment Standard (NES).

The impact on current Awards and agreements.

The new process for enterprise bargaining and good faith bargaining.

The new provisions relating to unfair dismissals and the different provisions for large businesses and small businesses.

Fair Work Australia

Fair Work Australia will consist of a President, Deputy Presidents and Commissioners, with 4 to 6 Minimum Wage Panel members drawn from various sources of expertise. FWA’s functions will include enforcement of the NES and Modern Awards, the registration of Enterprise Agreements, dealing with entitlement issues arising from the transfer of businesses, enduring that the general protections are provided to employees, determining unfair (and unlawful) dismissal applications, dealing with industrial action and dispute resolution between employers and employees.

In exercising its jurisdiction FWA is required to ensure that outcomes are fair and just through a process that must be quick and informal and avoid technicalities, delivering decisions based on equity, good conscience and the merits of the case. The FWA will operate under rules and may dismiss applications that do not comply with its rules or are frivolous or vexatious or have no prospect of success.

In dealing with unfair and unlawful dismissals, FWA may make interim decisions, inform itself of the facts as appropriate and is not bound by the rues of evidence and procedure. It may deal with matters in Conference or Formal Hearing and Mediation or Conciliation, during which it may make suggestions or express an opinion. Significantly, legal or paid agent representation may appear only with the permission of FWA. FWA may determine a matter in the absence of a party. There is an appeal to the full bench with permission of FWA, usually on a hearing and FWA may admit further evidence and take into account other information. The President may refer a question of law to the Federal Court.

Parties will usually bear their own costs, however FWA may order costs where a matter has been pursued or defended vexatiously or without reasonable cause or where it was apparent that there was no reasonable prospect of success.

There will be a new Fair Work Ombudsman, responsible for promoting compliance with Awards and enforcing the Act with a team of Fair Work Inspectors who may, during working hours and any time reasonably necessary, enter premises after showing ID, interview persons, obtain copies of documents and take samples. A Fair Work Inspector may have an assistant and may ask a person’s name and address if they have reasonable belief that a civil remedy is available for a breach. An Inspector may accept a written undertaking in relation to a contravention of a civil remedy provision, unless a s716 Notice has been given providing reasonable notice to remedy a breach.

The National Employment Standard

• The NES deals with the following issues:
• Maximum weekly hours
• Request for flexible working arrangements
• Parental leave
• Annual leave
• Personal/carer’s leave and compassionate leave
• Community service leave
• Long service leave
• Public Holidays
• Notice of termination and redundancy
• Fair Work Information Statement

Modern Awards

Modern Awards are being introduced to replace the old Awards and will make provisions as follows:

1. Supplement the NES to make provision for a fair and relevant minimum safety net and must include:

• coverage
• flexible terms
• dispute settlement procedures
• ordinary hours of work

1. May not include various terms such as long service leave and right of entry provisions
2. Modern Awards will be reviewed at least four yearly, may be modified at other times if necessary to achieve the Modern Award objective, or to remove ambiguity or uncertainty or to correct an error.

All existing Workplace Relations Act instruments such as Awards and agreements will become transitional instruments that will continue to operate until terminated or replaced.

From July 1, 2009, enterprise agreements made under the Act will override collective agreement based transitional instruments, but will not override individual agreement based transitional instruments.

From January 1, 2010, all current agreements terms will have no effect to the extent that they are detrimental to an employee in any respect when compared to the NES and it will be compared on a line by line basis and the employee will retain the benefit of comparable and more favourable terms and conditions in the transitional instrument.

From January 1, 2010, modern Awards may cover employees but do not apply where a WorkChoices Transitional Agreement is in operation, except that the base rate of pay may not be less than that prescribed by the modern Award. In the case of Certified Agreements, the modern Awards can apply, but will be overridden by the Certified Agreement to the extent of any inconsistency, except that the base rate of pay prescribed in the modern Awards shall apply. Wages cannot be frozen by Agreements like they could be in the past; the higher of the rates prescribed in an Agreement, the modern Award or the NES shall apply.

Federal and State Awards will be preserved by Notional Agreements Preserving State Awards (NAPSAs) and Award based Transitional Agreements will cease to apply. If a modern Award covers an employee, any Award based transitional agreement ceases to apply, except where the employee would be covered by the miscellaneous modern Award, in which case the Award based transitional agreement continues to apply.

Any terms of an Award based transitional instrument that is detrimental compared to the NES is of no effect. Award based transitional instruments that are not replaced by a modern Award will continue to apply for a maximum of 4 years from 1 January 2010 (or a later date as prescribed by the Regulations).

Enterprise Bargaining: The new agreement making process and good faith bargaining

In the new system there are available three types of agreements. They are: Single enterprise agreements, Multi Enterprise Agreements and Greenfields Agreements. Individual Agreements are no longer available.

Enterprise agreements may only contain material relating to permitted matters. Those matters are: Matters pertaining to the relationship between the employer and the employee, matters pertaining between the employer and the Union and deductions from wages. Enterprise Agreements must contain a Flexibility clause and a Consultation clause, a nominal expiry date and a Dispute Resolution clause.

Enterprise agreements may not contain unlawful terms such as objectionable terms, discriminatory terms, and terms excluding an employee’s rights in respect to unfair dismissal or terms that modify statutory provisions relating to industrial action or right of entry. It is incumbent on the employer to notify the employee of their representational rights and where the employee does not appoint an alternate bargaining representative and the Union has the right to represent those employees, then the Union is the default bargaining representative.

Good Faith Bargaining means that the employer must attend and participate in meetings at reasonable times, must disclose relevant information in a timely manner, respond to proposals in a timely manner, give genuine consideration to proposals and provide reasons, and refrain from capricious or unfair conduct in the course of negotiations for an enterprise agreement. FWA may make Bargaining Orders or a Serious Breach Declaration or a Workplace Determination or deal with Bargaining Disputes in respect to the negotiations for an Enterprise Agreement.

Enterprise Agreements are approved by a majority vote of the employees and approved by FWA if the agreement meets the content requirements of the Act and the employer has complies with the Access Period and has taken reasonable steps to explain the terms of the agreement to employees and the agreement passes the “Better-off-overall” or BOO test.

Unfair Dismissals: Large Business (15 or more employees)

Who is protected: An employee who has served 6 months with the employer, determined by the earlier of notice of termination or when termination takes effect, and includes casuals who have completed the minimum period of service whose employment has been regular and systematic and has a reasonable expectation of continuing employment. It also includes an employee who meets more than one of the following conditions: The employee is covered by a modern Award, is covered by an enterprise agreement or earns less than the high income threshold (currently $106,400.00).

An employee has been unfairly dismissed if he has been dismissed and the dismissal was harsh, unjust or unreasonable, [the dismissal was not consistent with the Small Business Fair Dismissal Code (in the case of a small business)] and the dismissal was not a case of genuine redundancy.

An employee is dismissed if his employment has been terminated at the employer’s initiative or if the employee resigns because he was forced to do so by the conduct or a course of conduct engaged in by the employer (constructive dismissal).

An employee is not dismissed if the termination of the employment comes at the completion of a specific task that the employee was engaged to do or a specific period that the employee was employed for or a specific season that the employee was employed for. Or the employee is terminated at the end of a traineeship period or the employee is demoted and retains the same remuneration and duties and is still employed with the employer.

In determining whether a dismissal is harsh, unjust or unreasonable, the FWA must take into account whether there was a valid reason for the termination, whether the employee was notified of that reason, whether the employee was given an opportunity to respond to the reason before the dismissal was effected, whether the employer unreasonably refused to allow the employee to have a support person present, whether there was a warning given to the employee where the reason relates to performance, the size of the business, an absence of dedicated HR personnel and any other matter that the FWA thinks fit. These factors are substantially the same as they were under the old Act, however, the matter of an unreasonable refusal to allow a support person is a new factor, which is only relevant if an employee requests that a support person be present. The Act requires the FWA to consider all factors in totality and it is the intention that the FWA will weigh up all factors in reaching its conclusion and that no one factor will be determinative.

A genuine redundancy occurs where the employer no longer requires the job to be done by anyone due to a change in the employer’s operational requirements AND the employer has complied with the consultation requirements in an applicable modern Award or enterprise agreement. There is no genuine redundancy if it was reasonable for the employee to be redeployed in the employer’s enterprise or to an enterprise of an associated entity of the employer and there is an obligation to give consideration to the opportunities for redeployment.

The new processes for unfair dismissal

Application must be made to FWA within 14 days, however FWA may extend this period in special circumstances. The preliminary issues that FWA must determine are whether an extension of time for lodgement (if relevant) is to be granted, whether the applicant is protected against unfair dismissal, whether the dismissal was consistent with the Small Business Fair Dismissal Code and whether there is a genuine redundancy. Once the preliminary issues are satisfied, FWA may then consider the merits of the application. Where there are contested facts, FWA must conduct a conference or hearing to determine those facts.

In the case of an unfair dismissal, the primary remedy is reinstatement to the same position or another position on no less favourable conditions. FWA may make additional orders to maintain continuity of service and to restore lost pay, however FWA may not make orders for compensation for shock, distress or humiliation. Compensation is only available where reinstatement is inappropriate. Compensation is limited to a maximum of the lesser of six months remuneration or half the high income threshold. In cases of employee misconduct, FWA must reduce the level of compensation awarded to the employee.

Unfair Dismissal – Small Business (less than 15 employees)

Small businesses will receive special consideration in unfair dismissal cases in respect to their lack of a specialist HR function within their organisation, their diminished ability to absorb the cost of lost time and their diminished ability to readily redeploy an employee in the case of redundancy. In the case of small businesses, the minimum period of employment before an employee may bring an unfair dismissal claim doubles to 12 months and there is a simple 6 paragraph dismissal code set out for small businesses to follow to ensure that a dismissal is not unfair. Between 1 July 2009 and 1 January 2010, the method used to determine whether you are a small business or not will be based on whether you employ less than 15 full time equivalents in your business. From 1 January 2010 the calculation will be based on a head count. The number of employees in a business includes all those employees in an associated entity and includes casual employees employed on a regular and systematic basis.

Who is protected: An employee who has served 12 months with the employer, determined by the earlier of notice of termination or when termination takes effect, and includes casuals who have completed the minimum period of service whose employment has been regular and systematic and has a reasonable expectation of continuing employment. It also includes an employee who meets more than one of the following conditions: The employee is covered by a modern Award, is covered by an enterprise agreement or earns less than the high income threshold (currently $106,400.00).

An employee has been unfairly dismissed if he has been dismissed and the dismissal was harsh, unjust or unreasonable, the dismissal was not consistent with the Small Business Fair Dismissal Code and the dismissal was not a case of genuine redundancy. If a small business has complied with the provisions of the Small Business Fair Dismissal Code, then the dismissal will not be unfair.

The Small Business Fair Dismissal Code sets out the circumstances where summary dismissal is warranted, the steps an employer should take in respect to an underperforming employee and a checklist to follow in dealing with a dismissal. See below.

The Code

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

In the case of small businesses and unfair dismissal claims, FWA is required to consider whether the fair dismissal code was complied with as a preliminary issue and if the code was followed the claim will be dismissed. If the code was not followed FWA will continue to consider whether the dismissal was harsh, unjust or unreasonable. The remedies for unfair dismissal in the case of small business are the same as for large business. Small businesses should ensure that they follow the fair dismissal code checklist.

Right of Entry

Officials of organisations who hold entry permits have 3 separate rights of entry into your business: They have the right to enter to investigate a suspected contravention. They have the right to enter to hold discussions and they have the right to enter to exercise state occupational safety and health rights.

Right of Entry – Suspected Contravention

Entry to investigate a suspected contravention relates to the contravention of the Fair Work Act 2009 or a term of a Fair Work Instrument, being a modern Award, enterprise agreement, workplace determination or FWA order and the contravention must relate to or effect a member whose industrial interests the organisation is entitled to represent and who performs work on the premises to be inspected.

Entry to premises to investigate a suspected contravention must be preceded by notice from the Official to the occupier and to any affected employer. The notice must be given during business hours and must be at least 24 hours but not more than 14 days prior to the entry being made to the premises. The notice must specify the premises to be entered, the day of entry and the name of the organisation seeking the right to enter the premises. The notice must set out the legislative provision relied upon and give particulars of the contravention to which the reasonable suspicion relates and must contain a declaration re the right to represent the interests of an employee or employees covered by the rules of the organisation. Permit holders may obtain an exemption certificate from FWA in respect to the issuance of notices.

Whilst on the premises, permit holders have the right to inspect relevant work or process or object related to the contravention, they may interview any person where the person agrees to be interviewed and the permit holder has the right to represent the person to be interviewed. A permit holder may inspect and make copies of documents, however there are strict rules about non members documents, the use of documents and the privacy provisions. Permit holders may issue a notice to provide later access to a record or document within 5 days of the entry.

Right of Entry – Hold Discussions

A permit holder may enter premises to hold discussions with one or more employees who work on the premises and whose industrial interests the permit holder’s organisation is entitled to represent, provided that employees are willing to participate and the meetings are scheduled at mealtimes or other break times.

The notice must state the location of the premises to be entered, the day of entry and the organisation seeking the right to enter. It must refer to the legislative provision on which the notice relies and a declaration regarding the organisations right to represent those employees. The notice must be given to the occupier, must be given during working hours and at least 24 hours but not more than 14 days prior to entry. The permit holder may only enter the premises during working hours on the day specified in the notice and must produce authority documents and comply with any conditions put on the permit as well as any reasonable OS&H requirement as well as any reasonable request as to the route taken through the premises to the agreed place of meeting. Permit holders are not permitted to enter residential premises.

Right of Entry – State OS&H Rights

A permit holder has the right to enter premises or access and inspect records as conferred by state OS&H laws and regulations on written notice that must be provided at least 24 hours in advance stating the intention to enter and the reason. Such notices must be provided to the occupier and any affected employer. The permit holder must not contravene any conditions on the permit, must produce the permit when requested, may only enter during working hours and must comply with all OS&H requirements.

Civil Remedy Provisions

The permit holder must not hinder or obstruct an employer in the exercise of his rights under an entry permit, the employer must not refuse or unduly delay entry and the permit holder must not make any misrepresentations as to the extent of his authority under a permit.

Powers of FWA re Right of Entry

FWA has the power to deal with disputes about the operation of the right of entry provisions of the Act. It has the power to impose conditions on a permit; it may suspend the permit or revoke the permit and make orders restricting the rights of an organisation or officials. It has the power to consider applications for permits and issuing permits.

Right of Entry and Other Instruments

Modern Awards must not include terms that require or authorise organisations or officials to enter premises to hold discussions and interview employees or to inspect any work, process or object.

Enterprise Agreements cannot include unlawful terms relating to the entitlement to enter premises to investigate suspected contravention or to hold discussions beyond what is prescribed in the Fair Work Act 1999.

Yes! This ends the Executive Summary. Call me anytime you need more info on these matters.