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Prime Minister John Howard has announced plans for a new workplace relations system and it’s important that all employers are alert to the implications. Richard Bunting outlines what the proposed changes could mean for business owners.

Active ImageThe changes will create, for the first time, a national or unified workplace relations system. They will further downplay the significance of industry awards and encourage the use of enterprise level individual and collective agreements. And they will greatly reduce access for employees to unfair dismissal laws.

Much of the detail is yet to be announced and, perhaps, negotiated with state governments. A Bill is yet to be tabled and is unlikely to become law before the end of 2005. However, the main features of what will become law are known.


New Features

Safety net of wages and conditions of employment

There will be a new Australian Fair Pay Commission to set minimum and award classification wages. The new commission will periodically set a single adult minimum wage and minimum wages for award classification levels and casual loadings. However, it is not yet clear how this commission will operate.

The legislation will set out key minimum conditions of employment. These will include annual leave, personal/carer’s leave, parental leave (including maternity leave) and maximum ordinary hours of work. Current awards and award classification structures are to be rationalised by a special taskforce. The list of allowable matters for inclusion in awards will be reduced. Notice of termination, long service leave, superannuation and jury service will no longer be allowable matters.

Agreement making

Certified agreements and Australian workplace agreements, which will continue to be available, will be vetted in the future by the Office of the Employment Advocate.

Agreements will begin to operate upon lodgement rather than the date of certification or approval as presently is the case. They will be able to operate for up to five years.

Unfair dismissals

Businesses which employ up to 100 employees will be exempted from unfair dismissal laws—that is, a claim for reinstatement or compensation will not be able to be made against those employers on the basis that a dismissal was harsh, unjust, or unreasonable. The same limitation will not be enacted for claims based on illegality—for example, due to temporary absence on account of illness or injury.

There will also be a reduction in access to unfair dismissal remedies in the case of employees working for businesses with more than 100 employees. This is because the probation period for new employees will be increased from three to six months.

Abolition of state industrial relations systems

The states will be invited to refer their powers to federal parliament to enact a unified national system of workplace relations. If agreement is not reached about referral of powers, the Federal government intends to press ahead with this legislation for a national system relying upon the power it has to make laws with respect to financial, trading, and foreign corporations. It estimates this alternative approach will still enable the commonwealth legislation to cover about 85 percent of all Australian employees.

Other matters from stalled Bills

The government intends to bring forward legislative measures rejected by the senate over the last few years. This will involve changes to:

• establish a specialist regulator to deal with issues in the building and construction industry

• provide for secret ballots prior to the commencement of industrial action

• provide for a single union right of entry regime

• make use of industrial action in support of pattern bargaining more difficult

• facilitate the use of public and private mediation services in dispute resolution.

Independent contractors

The government intends legislating to make it easier for people to work as independent contractors rather than be dragged into the workplace relations system applicable to employees.

OH&S and workers’ compensation

The government intends to establish an Australian Safety and Compensation Council to oversee implementation of national occupational health and safety standards. It also intends to pursue a national approach to workers’ compensation.


Employer Issues

The changes will be very significant from all points of view. They will continue a trend towards a system owing more to local enterprise conditions than industry-wide arrangements. Achievement of sound long-term industrial relations outcomes will continue to depend on fostering an excellent employment environment at the enterprise. For many employers the legislation will present an opportunity to encourage change in this direction.

Employers now under state regulations

For employers presently regulated by state industrial relations systems, there are particular issues which should be considered as the political and legislative processes develop. These include:

• quelling any short-term employee alarm about what is ahead

• what status currently applicable state awards and enterprise agreements will have; there is at the moment no clear answer to this, and it needs to be watched

• whether different unions or union branches will become involved in the employer’s workplace because of a move from the state system to the federal system–if so, there may be pre-emptive measures which the employer should be thinking about

• if there is relevant experience and knowledge in the state industrial tribunal which might be lost in this process–if so, the employer may wish to think about lobbying for particular outcomes or making different arrangements for the future.

Employers now under federal regulations

For employers presently under the federal system, some issues to think about include:

• dealing with any short-term employee alarm about what is ahead

• how best to utilise the more flexible agreement instruments likely to be available from early 2006

• whether to lock into new certified agreements now in circumstances where the union may be keen to do a deal and willing to trade for it

• what response is best to counter union demands that current arrangements be preserved in common law deeds or other such instruments outside the framework of the workplace relations legislation.

For all employers, this question should be asked: is it a good idea to use any of the formal instruments available under the federal system–in particular, certified agreements or Australian workplace agreements? In many cases the answer will be yes. But in some cases the answer will be no. Alternative informal staff employment arrangements may be better suited to fostering a non-industrialised employment environment.

Businesses which utilise substantial contractor workforces need to consider the impact of the planned changes upon those workforces. For example, they may get caught up in state to federal transitional issues or state to federal union demarcation issues.

A strategy to achieve the desired outcomes in each of these areas needs to be developed and fine-tuned as more information emerges.

*Richard Bunting is a partner at Blake Dawson Waldron lawyers and can be contacted on 03 9679 3597 or email richard.bunting@bdw.com


For & Against

An opinion poll reveals that leading government and industry bodies don’t see proposed industrial relations reform in the same light:

Federal Government

"We need a workplace relations system that is flexible and responsive to the needs of small business, so they can get on with the job! These reforms will be welcome news for Australia’s 1.2 million small businesses.&

—Fran Bailey, Minister for Small Business and Tourism.

State Government

"The NSW industrial relations system is used by two out of three businesses in this state. It’s simple, efficient, and it resolves disputes quickly and fairly. NSW will not hand over industrial relations, because our system is better."

—John Della Bosca, NSW Minister for Industrial Relations.

Australian Chamber of Commerce and Industry (ACCI)

"It is a significant nation-building package for Australian jobs. The measures are the next logical steps on the path to modernising Australia’s system of employment regulation. If implemented, they have the potential to kick-start a new round of productivity and employment growth in the private sector, and act as a foundation for higher living standards for families and for employment flexibility into the next decade."

—Peter Hendy, chief executive of the ACCI.

Australian Council of Trade Unions (ACTU)

A new national survey shows public opinion is against the Federal government’s plans for radical changes to workplace relations. "With seven out of 10 working people believing the changes will create more fear in the workplace, the prime minister is wrong to dismiss the results of this opinion poll and does so at his own political peril."

—Greg Combet, ACTU secretary.

Australian Retailers Association (Victoria)

"Whilst the government’s plans for a national industrial relations system are ambitious, national consistency is long overdue and is welcomed by retailers."

—Vivienne Atkinson, acting executive director, ARAV.

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