Workplace Relations Change Require Your Attention

From March 27, 2006, constitutional corporations (mainly Australian companies) and their employees were bound by a federal workplace relations (WR) system reform called WorkChoices. Although this legislation was a controversial step at the time, it paved the way for a nationwide workplace relations system in place of the multiple state systems that were in place.

WorkChoices focused on deregulating the labour market, permitting employers and employees to bargain and negotiate (either collectively or individually) at workplace level. One of the principal objectives of the Workplace Relations Act was to ‘ensure that, as far as possible, the primary responsibility for determining matters affecting the employment relationship rests with the employer and the employees at the workplace or enterprise level’.

However, the WR framework changed on July 1 last year with the commencement of the Fair Work Act, which has wound back areas of WR reform and increased regulation. Unfair dismissal laws changed, a new collective bargaining framework was established and Fair Work Australia and the Fair Work Ombudsman all commenced operations on that date.

The Fair Work Act applies to a greater number of employers, extending to sole traders and partnerships across Australia (excluding Western Australia). December 31, 2009 was also the last date an employer could lodge individual statutory agreements (they are not permitted under Fair Work), with the National Employment Standards, Modern Awards and referral of IR powers from New South Wales, South Australia, Tasmania and Queensland were implemented thereafter.

The main areas that employers in the hardware retail industry must now pay attention to include:

  • Federal WR coverage for sole traders and partnerships
  • Unfair dismissal laws
  • Performance management/termination procedures
  • National Employment Standards
  • Modern Awards application

Sole traders and partnerships

From January 1 this year, sole traders, partnerships and other unincorporated entities in New South Wales, South Australia, Tasmania and Queensland referred their IR powers to the Commonwealth. All private sector employers and their employees in those states are now covered by the Fair Work Act.

Employers who were transferred into the national system are now subject to transitional arrangements. State awards (except state enterprise awards) that covered those employers and employees prior to January 1 are termed Division 2B State Awards and they will continue to apply until the end of the year, when they will automatically terminate. Beyond that, those employers and employees covered by the Division 2B State Awards will be covered by a relevant modern award.

State employment agreements will continue to operate indefinitely until terminated or replaced by an enterprise bargaining agreement under the Fair Work Act. However, the National Employment Standards, which are explained further on, will apply to these employers and employees.

Unfair Dismissal from 1 July 2009

Although the definition of an unfair dismissal has not changed (i.e. a dismissal that was harsh, unjust or unreasonable), there is no longer a blanket exemption from unfair dismissal laws. In effect, all employers now need to be concerned with new unfair dismissal laws. This will have an impact on internal dismissal policies and procedures, and place more emphasis on an effective performance management framework.

New exemptions now apply and employees who fall into any of these main exemptions are unable to make a claim for an unfair dismissal:

  • Employees of small business with less than 12 months continuous service and employees of larger businesses with less than six months continuous service.
  • Award-free or agreement-free employees earning above $108,300pa (indexed annually).
  • Casuals who are not on a systematic and regular roster and have an expectation of continuing employment.The new Small Business Fair Dismissal Code applies to employers with less than 15 full-time equivalent employees at the time of the dismissal. Small business employers must follow the Code for the dismissal to be considered fair and it includes providing a valid reason to the employee for the dismissal, as well as implementing a ‘warning’ system.
The 10 minimum National Employment Standards (NES) apply to all employees covered by the federal system, to the extent that the employee must be receiving at least these minimums. If an employee industrial instrument provides a greater benefit than the NES, then the provision in the instrument will apply.
National Employment Standards

The 10 NES include:

1) Maximum of 38 ordinary hours per week (plus reasonable additional hours/overtime)

2) Requests for flexible working arrangements

3) Parental leave

4) Personal/carer’s and compassionate leave

5) Annual leave

6) Community service leave

7) Long-service leave

8) Public holidays

9) Notice of termination and redundancy pay

10) Fair Work Information Statement

Most of these entitlements were awarded to federal system employees under previous legislation. However, there have been some modifications and additions to entitlements. Parental leave, for example, is now extended to 24 months unpaid leave and available to both parents. Parents/carer’s of school-age children, and/or of disabled persons under the age of 18, are also able to request flexible working arrangements from their employer to care for those children. An employer can only refuse this request on reasonable business grounds.

Employers should get to know how all the NES operate and how to effectively implement the entitlements within their workplace.

Modern Award

The introduction of modern awards on January 1 replaced the various state agreements that had covered most of the national system employers and employees.

The General Retail Industry Modern Award 2010 applying to retail employees in the retail hardware industry came into force on New Year’s Day. Employers to whom the award applies must be familiar with the new award and the operation of the transitional provisions under the award, which allow a phase-in of penalties, overtime, loadings and allowances contained within the award.

It is important for employers to assess their employees’ classifications and wages against those provided under the award, which may require reclassifying employees and adjusting their wages accordingly.

Employers may also need to implement changes to an employee’s normal working arrangements. The award contains a number of rostering provisions, which include having an effect on employees that mostly work Sundays and restrictions on the number of days that some employees are able to work during a four-week cycle.

Although the employer and individual employee can agree – or, an employee may request – to modify these provisions, under certain conditions it is important for employers to be familiar with the provisions and to follow them if no agreement or request is otherwise made.

All modern awards contain an individual flexibility term that allows the employer and an individual employee to agree to vary the application of certain terms of the award. These include overtime, penalties, allowances and arrangements for when work is performed. This clause encourages ‘salary’ arrangements to be put in place, but the agreement must not disadvantage the individual employee in relation to the terms and conditions of their employment.

These are only a few of the latest wave of changes to hit employers under the national WR system affecting almost all employers in Australia. It is understandable that most employers feel burdened under the increased regulation and the implementation of the changes.

However, it is important for employers to know the law and to be compliant. Penalties apply to employers who do not comply, so it is important to get it right from the beginning. You should seek specialist advice and/or contact www.fairwork.gov.au for further information.

LisaNicolle