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Changes to unfair dismissals and workplace bargaining from July next year
The government has announced further changes to the industrial relations system, to commence
1 July 2009.
The changes from 1 July 2009 involve the unfair dismissal exemptions and certain rules relating to negotiating workplace agreements. The announcement was made by the Minister for Employment and Workplace Relations, Ms Julia Gillard to the National Press Club on Wednesday.
We explain the key changes that the government proposes below.
Unfair dismissal
From 1 July 2009 the current exemption for employers who employ “100 employees or fewer” will no longer apply.
From 1 July 2009, employers with fewer than 15 employees will have the following “protections” from unfair dismissal:
- employees will not be able to access the unfair dismissal regime until they have served 12 months with the employer (that is a doubling of the “qualifying period”); and
- if the employer complies with the Small Business Fair Dismissal Code, the dismissal will be deemed to be fair.
The Small Business Fair Dismissal Code which has now been released, requires that the employer warn the employee that their employment may be terminated and that the employee be given a reasonable opportunity to improve their performance. The reason for the warning must be a “valid reason” relating to the employee’s conduct or capacity to perform their job. It will not be necessary for the warning to be in writing. A warning will not be required where the employee’s conduct warrants summary dismissal.
The Small Business Fair Dismissal Code includes a checklist that employers of fewer than 15 employees may complete, to use as evidence of compliance with the Code.
Further to this, the exemption from unfair dismissal for terminations on the basis of “genuine operational requirements” is to be changed to an exemption for terminations on the basis of “genuine redundancies”.
It is possible that for the period 1 July 2009 to 31 December 2009 both the Australian Industrial Relations Commission and a newly created Fair Work Australia will have jurisdiction over unfair dismissals. Fair Work Australia is to be “fully operational” from 1 January 2010 however the government has indicated that there may be a “transitional period” while the Commission completes its work on the Modern Awards, during which both Fair Work Australia and the Commission will operate concurrently. It is therefore possible that Fair Work Australia may commence from 1 July 2009 in a limited form, with the power to deal with the likely increased number of unfair dismissal claims.
Content of workplace agreements
It is proposed that restrictions relating to “prohibited content” be lifted from 1 July 2009. From that time, workplace agreements may include any terms that pertain to the relationship between the employees and their employer, and any terms relating to the employer and any union to be covered by the agreement.
From 1 July 2009 it is proposed that agreements will be able to include matters like salary sacrifice arrangements, health insurance, child care and payroll deductions of union dues for union members. Terms dealing with the operation of the agreement will also be allowed.
Good faith bargaining
The government has also provided further detail as to how good faith bargaining is to be enforced by Fair Work Australia. Currently there is no obligation to bargain in good faith. It is proposed that from 1 July 2009, Fair Work Australia will be able to make good faith bargaining orders. Good faith bargaining orders may require parties to:
- meet within a reasonable timeframe;
- disclose relevant information;
- consider proposals and respond to them; and
- refrain from “unfair or capricious conduct”.
Fair Work Australia may only make such orders where a majority of the employees are seeking to negotiate a workplace agreement. Fair Work Australia may determine by any means it sees fit, whether a majority of the employees want to negotiate a workplace agreement.
Compulsory arbitration
Compulsory arbitration will not be a feature of collective bargaining under Forward with Fairness. However compulsory arbitration by Fair Work Australia may occur in “exceptional circumstances”, where industrial action is causing:
- a threat to safety or health;
- a threat to the economy; or
- significant harm to the parties.
Where a matter goes to arbitration in these circumstances, Fair Work Australia may “determine a settlement” to bring an end to the dispute.
Industrial action
The requirement for a secret ballot before protected industrial action can occur will be retained, as will the requirement of three days notice of any protected industrial action.
The prohibition on unprotected action and the mandatory deduction of at least four hours pay where employees participate in unprotected action is to be retained however it is proposed that where industrial action is protected, pay be deducted only for the amount of time the employee participates in the industrial action, that is the four hour minimum rule will no longer apply.
In the case of partial work bans, it is proposed that employers be able to “use their discretion” to either:
- tolerate the bans;
- stand down or lock out employees; or
- issue a “partial work notice” and make deductions proportional to any work not performed.
Fair Work Australia is to be given the power to review whether an amount deducted in these circumstances is proportional.
Bargaining with the “low paid”
The government proposes to enable a union or bargaining representative to apply to Fair Work Australia to be permitted to bargain with multiple employers on behalf of “low paid” employees. The target “low paid” sectors referred to in the government’s policy include child care, aged care, community services, security and cleaning.
The good faith bargaining provisions will apply to multiple employer negotiations and Fair Work Australia may mediate or conciliate any disputes between the parties in the negotiating process.
As an example, a union may seek to negotiate with five different child care operators collectively. Alternatively, a union (or an employee representative) may seek to negotiate with a direct employer (sub contractor) and the head contractor collectively.
Timing of the proposed changes
While the government has provided further detail of its Forward with Fairness policy, a Bill is yet to be introduced into parliament. It has been announced that the Bill will go through a consultation process in October, with introduction into the lower house expected late this year. Given this, keep in mind that it is still possible that certain elements will change before the expected start date of 1 July 2009.
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