Five more Fair Work traps

The Fair Work Act regime is officially in place, at least in part. Employers will have to focus more on what this actually means for their businesses, as all of the players feel their way around the new rules. Here are a few areas which you might want to pay attention to.

Modern Awards

For the last 18 months, the members of the Australian Industrial Relations Commission have had their heads down streamlining thousands of industrial awards in about 100 industry based or occupation based ‘Modern Awards’. These awards are due to take effect from 1 January.

Aside from the AIRC, the resources expended by industry groups, unions, individual employers and the Government in this exercise have been massive. Yet still many of these groups have identified that they simply have not had the manpower to participate in all aspects of the process comprehensively. This means that there will be many businesses (which might include yours), who be finding out over the coming six months that your minimum obligations to employees are going to change, perhaps markedly.

We have already seen the Restaurant and Catering Industry successfully campaign to have businesses in that sector excluded from the hospitality, hotel and gaming industry, where they were originally placed by the AIRC. Many readers will be aware of the uproar at the prospect of restaurants and cafes having to pay substantially higher wages as a result. Instead, they will now get their own separate Modern Award. It seems unlikely that they will be the last industry.

Your business may need to be prepared to be involved in applications to Fair Work Australia vary Modern Awards, as you might get some surprises about how far your obligations now extend.

Record Keeping Obligations

While there won’t be any substantial change, there are a few banana skins in the recently released Fair Work Regulations that employers will need to watch for.

Individual flexibility arrangements which can be made with individual employees under Modern Awards or Enterprise Agreements must be in writing and must be kept as part of the employee’s record. Similarly, if an employee is above the high earning threshold (about $108,000 per annum) and is to be excluded from award coverage, the guarantee of earnings required under the Act must be in writing and must be part of the employee’s record.

Employers must now also record the name of the person who acted to terminate an employee’s employment. No doubt this will provide some interesting material for cross examination in future unfair dismissal claims. Penalties might apply if this requirement isn’t met.

Employees are also now entitled to ‘interview’ employers about their employee records.

National Workplace Relations System?

Was WorkChoices a truly national workplace relations system? It was in the sense that it applied to Corporations established across Australia. It wasn’t because it could not, under the Federal Constitution, cover a large number of private and public sectors.

Will the Fair Work regime deliver a national system? Getting warmer, but not quite. In addition to the state of Victoria, which referred its power in 1996, South Australia, Queensland and Tasmania have indicated that they will refer their workplace relations powers to the Commonwealth. This means that the Fair Work Act will apply to all private sector employment in those states.

What’s left is NSW, where the Government website says in somewhat unavailing terms: “The New South Wales Government’s position remains that it will consider whether and how it may participate in the national industrial relations system after all legislation has passed the Commonwealth Parliament.” Discussions with Canberra continue.

WA has also chosen to opt out for now, preferring to commission a lengthy review of its own system. That state is considered unlikely to refer its powers.
There is also the question of State Government and local Government employees (outside Victoria). There seems to be an array of positions between the states on these issues.

Union Rights of Workplace Entry

Many commentators are expecting a lot of activity on this front. Previously a union wanting to enter a workplace to hold discussions with employees had to meet two criteria. First, it had to be able to represent the industrial interests of the employees in the workplace and second, that there was an award that bound that union covering the work.

There is no longer a requirement that the union be specifically bound to an award covering work at the particular worksite. This may well encourage unions with expansionist ambitions to push into workplaces where there are already established union relationships. In a union movement where declining participation means every member counts, employers could end up being the meat in the sandwich.

Redundancy Obligations

Under the National Employment Standards which take effect on 1 January 2010, all employees covered by the Fair Work system will be eligible to receive severance payments if they are made redundant. And that means all employees from the CEO down. Quite aside from the separate debate about senior executive termination benefits, employers will need to think carefully about how to structure termination packages in contracts of employment for employees at all levels, and be conscious of these obligations which were previously limited to award based employees. Otherwise they may get an unexpected surprise when they are told what they have to pay retrenched employees.

The requirement that an employer must explore redeployment options before a redundancy is considered “genuine” and therefore exempt from unfair dismissal laws also presents challenges. Particularly in large organisations, which might operate through several legal entities, processes will need to be developed to assist an employer show that it met the requirements of the Act.

The lessons for employers

Stay tuned in to what these changes mean for your business and be prepared. There will be plenty of activity as people come to grips with the scope of the new laws.