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3 Aug 12
The Fair Work Act review - a summary

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The Fair Work Act review was released by the Federal Government on 2 August 2012.  The review was conducted by panel members Professor Ron McCallum, former Federal Court judge Michael Moore and senior economist Dr John Edwards.

While finding that the current laws are working well and the system of enterprise bargaining, underpinned by the national employment standards and modern awards, is delivering fairness to employers and employees, the panel recommended 53 changes to the Act.

Wins for employers

Two of the most significant recommendations represent big wins for employers. 

The Panel recommends that an application for a protected action ballot order may only be made when bargaining for a proposed agreement has commenced, either voluntarily or because a majority support determination has been issued by Fair Work Australia.  This contradicts the JJ Richards series of cases where the Full Federal Court found bargaining did not need to commence before a protected action ballot could be ordered.

If implemented, this recommendation would require unions to seek a majority support determination, instead of being able to utilise or threaten protected industrial action to force an employer to bargain. 

The Panel also recommended that the Barclay v Bendigo TAFE Full Federal Court decision be overturned by a change to the Act.  In Barclay, the Full Federal Court determined the central question in a general protections matter (‘Why was the adverse action taken?’) could not be answered solely by establishing the subjective intention of the decision maker.  Instead, the Court had to find the ‘real reason’ behind the employer’s conduct, which could be an unconscious reason, not what the employer thought was the reason.

If the Panel’s recommendation is adopted, the subjective intention of the person taking the alleged adverse action would be determinative and there would be no need to look into the unconscious, but ‘real’ reasons for the decision.

Areas of concern

Employers will not be pleased that the Panel refused to recommend a reduction in the scope of matters which can be dealt with in enterprise agreements. 

Employers (particularly those in the construction and resources sectors) will also be uneasy with the Panel’s recommendation that, when intending to negotiate a Greenfield agreement, they should be required to notify all unions with eligibility to represent employees who will be covered by it.

Review summary

The Panel found that:

  • there was no convincing evidence that the Act impedes productivity growth
  • industrial disputes had not increased under the Act, and
  • there is no evidence that the Act’s unfair dismissal framework has made a discernible difference to overall employment.

Some of the other major Panel recommendations include:

The economy

The Panel recommends Fair Work institutions broaden their role to include active encouragement of more productive workplaces.  Examples include:

  • identifying best-practice productivity enhancing provisions in agreements
  • encouraging the development and adoption of model workplace productivity enhancing provisions in agreements, and 
  • disseminating information on workplace productivity.

The safety net

The Panel recommends:

  • to encourage the use of individual flexibility arrangements (IFAs), the BOOT (better off overall test), as it applies to IFAs, be amended to permit an individual flexibility arrangement to confer a non-monetary benefit on an employee in exchange for a monetary benefit, provided that the value of non-monetary benefit is proportionate to the monetary benefit foregone and the latter is relatively insignificant
  • flexible working arrangement be extended to a greater range of caring circumstances 
  • the Government consider limiting the number of public holidays under the national employment standards capable of attracting penalty rates to 11, and
  • annual leave loading not be payable on termination unless specifically allowed by an enterprise agreement or modern award.

Enterprise bargaining

The Panel recommends:

  • bargaining representatives be allowed to apply for bargaining orders where bargaining commences more than 90 days before the nominal expiry date of an existing agreement
  • individual union officials be prevented from being bargaining representatives for employees for whom the union has no coverage
  • provisions in enterprise agreements allowing employees to opt out of coverage of the agreement be prohibited
  • making an enterprise agreement with one employee be prohibited, and
  • where there is an impasse in negotiations for a Greenfields agreement, FWA be empowered to conciliate and, if that is unsuccessful, make an arbitrated ‘last offer’ to determine the content of the agreement.

Industrial action

The Panel recommends:

  • employers should continue to be required to provide accommodation even if employees are taking industrial action, and
  • the Act no longer confer power on the Minister to terminate protected industrial action.

Unfair dismissal

The Panel recommends:

  • the time limit for lodging an unfair dismissal claim be extended to 21 days to align with the limit it recommended for general protections applications relating to dismissal, and
  • Fair Work Australia be given the power to conduct hearings that are informal, inquisitorial and determinative.

General protections

The Panel recommends the time limit for making a claim under general protection provisions relating to dismissal be reduced to 21 days to align with its unfair dismissal time limit recommendation.

Fair Work Australia – what’s in a name?

In a recommendation that will bring a smile to the face of many, the Panel also proposed the name of Fair Work Australia be changed to include the word ‘Commission’ and remove the words ‘Fair Work’.

What next

It remains to be seen which, if any of the recommendations will be adopted by the Government and result in changes to the Act.

Workplace Relations Minister Bill Shorten has promised to consult with stakeholders and is meeting with state and territory ministers later this month to obtain feedback. 

Meanwhile, business and industry continue to be on guard about this moving target.

Want to know more

We will provide a full account of the impact of the review at our 13th Annual WRS Conference next Friday, 10 August 2012. 

For full program details, and to register, go to www.mccullough.com.au/workplaceconference.

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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