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A Brief Overview of the Fair Work Bill

Summary

•  The Fair Work Act 2008 ("Fair Work") will replace the Workplace Relations Act 1996 and its ‘Work Choice' changes.

• Fair Work will apply to the same employers as the current Workplace Relations Act 1996 i.e. it will not apply to partnerships or individual persons who are employers. It will apply to constitutional employers (Pty Limited Companies), trading corporations and the like. It is my view it will apply to trusts where the trustee is incorporated.

• Fair Work introduces 10 National Employment Standards (NES), replacing the Australian Fair Pay and Condition Standards. Some of these standards will have an impact on optometry practice, particularly the changes to parental leave and an employee's ability to request flexible working hours.

• Unfair dismissal laws will be radically overhauled. Casuals will also have unfair dismissal rights. Given most practices are small businesses, employ casuals and employ fewer than 100 employees (and as such are currently exempt from unfair dismissal laws), this will have a substantial impact. This is set out in more detail below.

• Australian Workplace Agreements (AWAs) have largely been removed. New AWAs are generally not allowed.

• Collective bargaining will be the main way of workplace level agreement making. It is not dissimilar to the current system of making a Collective Agreement, only there have been particular obligations imposed including a requirement to bargain in good faith.

• There will be a new system of modern awards with another 10 minimum conditions. There will be a modern retail award which will cover most dispensary and store assistants.

• These awards apply to employees who are not ‘high income earners', which is envisaged to be those earning less than $100,000. They do provide some flexibility for an employer and employee to agree on individual changes to some award terms, but there will be restrictions on this ability including that there must be no overall disadvantage and an employee can withdraw from the arrangement on limited notice.

• The Australian Industrial Relations Commission and the Workplace Ombudsman will be abolished and replaced with a "one stop shop" Fair Work Australia.

• Union rights of entry and union role in bargaining have been expanded. These are unlikely to have any great impact on the industry.

• There will be national minimum wage orders made by Fair Work Australia for award/agreement free employees.

• Some aspects of the bill such as in relation to unfair dismissal shall apply from 1 July 2009. The NES and modern awards shall apply from 1 January 2010. We have not seen any transitional arrangements as yet.

Unfair Dismissal 

The primary changes are:

• Casual employees engaged on a regular and systematic basis now have unfair dismissal rights

• There is no longer a bar on employees bringing unfair dismissal proceedings based on the number of employee's their employer engages. In other words those who engage 2 or 200 employees can be subject to an unfair dismissal claim.

• Qualifying periods before an employee may bring an unfair dismissal claim remain at 6 months for employers of 15 or more employees and have been increased to 1 year for employers of fewer than 15.

• A fair dismissal code will be introduced for employers of fewer than 15 employees. Compliance with the code will be a defence to an unfair dismissal claim, however the Code largely mirrors the current practice of the Industrial Relations Commission in determining unfair dismissals and is unlikely to provide any substantial protection for small businesses.

• The ‘operational requirement' exemption has been removed and replaced with a ‘genuine redundancy' exemption. If an employee is made genuinely redundant and the employer has complied with all requirements of any applicable award or agreement in relation to consultation, the employee cannot pursue an unfair dismissal remedy. However, it will not be a genuine redundancy if the person could have been redeployed, including to an associated entity (this would include another related practice).

National Employment Standards

A summary of the NES to be introduced is set out below:

• The NES is a safety net that all national system employers must comply with irrespective of an employee's salary. It replaces the current Australian Fair Pay and Condition Standard.

• Maximum weekly hours of work - The NES provide for a maximum of 38 ordinary hours of work for full time employees. Employers can ask an employee to work more than 38 hours. The request must be reasonable.

• Hours can still be averaged. The NES do not limit the period over which hours are averaged if done in accordance with a modern award or enterprise agreement. If an employee is not covered by a modern award or enterprise agreement, then hours can only be averaged over a six month period. Previously hours could be averaged over a 12 month period.

• Reasonableness depends on matters such as an employee's health and safety, their personal circumstances (including family responsibilities), the nature of the business, compensation payable for working extra hours (either extra compensation or a level of remuneration that reflects an expectation of longer hours), notice of the request, patterns in the industry and the employee's role or level of responsibility.

• Requests for flexible working arrangements - Is a new entitlement. Parents or carers of children under school age can request in writing a change in working arrangements to assist with the care of the child.

• Employees must have worked for the employer for at least 12 months before making such a request. Casuals can make the request but must be long term casuals with an expectation of ongoing employment.

• An employer must respond to an employee's written request in writing within 21 days. If the request is refused an employer must set out the reasons for refusing.

• An employer can only refuse a request on reasonable business grounds. The Bill does not tell us what reasonable business grounds are, however the explanatory memorandum to the Bill indicates they are to be assessed according to the particular circumstances that apply when the request is made. This may include, for example, the effect a change would have on the business financially and any impact on efficiency, productivity or customer service, an inability to organise work among other staff or to recruit a replacement, or the practicality of the request.

• This could have a significant effect on your practice if current applications by Tribunals of similar terms are utilised as it would only be in a bare minimum of cases that an employer could refuse.

• Parental leave - The NES continues to provide for unpaid parental leave for permanent employees who have worked for an employer for at least 12 months (at the time leave commences) and will now provide leave for long term casuals with an ongoing expectation of employment. The leave is available to employees who will have responsibility for the care of the child.

• The NES increase the total amount of unpaid parental leave an employee can request from 12 to 24 months.

• Each parent can take up to 12 months unpaid leave (to run consecutively) or one parent can request up to 24 months' leave.

• There is an entitlement to a maximum of three weeks concurrent unpaid parental leave around the time of a child's birth/ adoption.

• An employee can request the additional 12 months leave after the first 12 month period. The employee must give the employer at least four weeks' notice, which in my view is a concern as it gives the employer very little time to plan around the increased leave. For instance a replacement or temporary employee may have been engaged on a 12 month contract and already planned to leave by that time.

• An employer can refuse a request for an additional period of parental leave (after the first 12 month period) on reasonable business grounds. The employer must provide the employee with reasons for refusing.

• The NES introduces parental leave for same sex de facto partners.

• Employees must give their employer ten weeks' written notice of the proposed parental leave start and end dates. An employee wishing to extend a period of parental leave must give the employer 4 weeks notice.

• Annual leave - Annual leave entitlements remain the same, ie four weeks annual leave.

• The NES changes accrual methods and the concept of service for the purpose of calculating the entitlement. Leave is accrued as and when ordinary hours are worked.

• However, it is not abundantly clear how part time employees should be treated. The NES provides a set "4 weeks" of leave and the accrual method is not clear how leave would be treated for a part time employee who worked say 3 days one week and 5 days the next. It is not clear whether or not the employee could take 4 weeks of his/her 5 day working week as leave or whether it would be 2 weeks of 3 days leave and 2 weeks of 5 days leave.

• All employees can cash out annual leave, provided an accrued balance of at least 4 weeks leave remains.

• An award or agreement can also deal with cashing out. However, if an employee is not covered by an award or agreement the employer and employee must agree to the cashing out. An employer cannot exert undue influence on an employee to cash out leave.

• Personal/carer's and compassionate leave - The amount of personal leave remains the same.

• Casual employees are not entitled to any paid leave but may be entitled to take two days unpaid personal/ carer's or compassionate leave at a time.

• Personal/carer's leave accrues at the rate of ten days per year. The number of days paid carer's leave that an employee can use is no longer capped at ten days a year.

• Leave can be cashed out under provisions in modern awards and agreements provided a minimum of 15 days remain, but employees not covered by such instruments cannot cash out this leave.

• Community service leave - Unpaid leave for eligible community service activity, such as jury duty or voluntary emergency management must be provided.

• Employers will have to pay full time and part time employees undertaking jury duty for a period of up to ten days. They are to be paid at their base rate of pay for ordinary hours of work.

• Long service leave- For the moment long service leave will continue to be regulated by state and territory legislation, awards and agreements. It is envisaged we will move to a national system, which in my view should be encouraged.

• Public holidays- Payment when an employee is absent on prescribed public holidays is still required.

• An employer must pay an employee's base rate of pay for ordinary hours that would have otherwise been worked on that day.

• An employer can request an employee work on a public holiday. An employee can refuse. However the request and refusal must be made on reasonable grounds. The reasonableness test is similar to the one applied in respect of additional weekly hours of work.

• The Queens birthday holiday has been added to the list of prescribed public holidays. The list now includes the following eight days: 1 January (New Year), 26 January (Australia day), Good Friday, Easter Monday, 25 April (Anzac day), the Queens birthday (as per state or territory), 25 December (Christmas) and 26 December (Boxing day).

• Notice of termination and redundancy pay- The NES provide for written notice of termination and now a guaranteed entitlement of redundancy pay to all employees.

• The NES does not change the current minimum period of notice that an employer must provide. The period of notice required remains based on length of service (from one week where an employee has up to a year's service, progressing to four weeks' notice where an employee has more than five years' service and an additional week for an employee who is older than 45 and who has worked for the employer for at least two years).

• The NES sets out a new compulsory minimum redundancy pay scale, providing for four weeks' pay for employees with one to two years' service progressing to 16 weeks for employees with 9 to 10 years service.

• An employer does not have to pay any redundancy pay under the NES if it is a small business (fewer than 15 employees) or the employee being made redundant has less than one year's service. However many draft modern awards contain small business redundancy provisions, where businesses with fewer than 15 employees will have to pay a reduced redundancy entitlement, including the current proposed retail draft. This is a concern.

• Fair Work Information Statement - Employers will have to provide all new employees with a Fair Work Statement.

• The Fair Work Statement will be drafted by Fair Work Australia and will contain information about the NES, modern awards, agreement making, freedom of association and the role of Fair Work Australia and the Fair Work Ombudsman.

If you would like further information about the Fair Work Bill or other employment related matters, please contact Peter Frazer .