ALP releases industrial relations plans

The Australian Labor Party (ALP) has started to release more details of its industrial relations (IR) policy which will be taken to this year’s federal election. On 17 April, Kevin Rudd gave an address to the National Press Club outlining key aspects of Labor’s policy.

On Anzac Day, opposition spokesperson Julia Gillard announced the ALP’s proposal to merge existing government agencies, including the Australian Industrial Relations Commission (AIRC), into a single new body called ‘Fair Work Australia’.

Further, at the ALP’s National Conference over the course of the weekend (27 to 29 April 2007), an even more detailed policy platform was released, called Forward with Fairness. This bulletin provides links to the recent policy announcements.
Some aspects of the policy, such as the focus on collective bargaining and the abolition of Australian Workplace Agreements, reconfirmed the established Labor position.

However, after stating that ‘there can be no going back to the industrial culture of an earlier age’, Mr Rudd announced changes that signal a move away from Labor’s previous stance on industrial relations. Many commentators have already noted comparisons with the Blair government’s approach in the United Kingdom which modified, but did not disturb many of the Thatcher government’s IR reforms.

Instead of ‘ripping up these laws’ (the current ALP mantra), much of the infrastructure erected by the 1996 Reforms and WorkChoices has been kept in place, with modifications the order of the day.

The key aspects of Labor’s policy are outlined below:

Maintain and extend a uniform federal system

• Labor would maintain a uniform system of industrial relations and would not pursue a re-empowerment of state jurisdictions. However, it does not appear that Labor will seek a complete referral of all IR powers to the Federal Government.
• Labor would extend the uniform national system established under Work Choices to sole traders and partnerships (entities that are currently excluded from the national laws for constitutional reasons). 
• It is unclear how such a uniform system would operate. The ALP plans to use all available constitutional powers (including the corporations and arbitration power), whilst presumably seeking some referrals (or limited referrals) from the states in relation to some of the key policy aspects.

Fair Work Australia

The ALP will establish an unprecedented one-stop shop for industrial relations in Australia, known as ‘Fair Work Australia’. Fair Work Australia would be a new independent umpire designed to ‘ensure fairness and balance in Australian workplaces.’

The most significant aspect of Fair Work Australia is the abolition of the AIRC, as well as the consolidation of its work with that of the Fair Pay Commission, the Office of the Employment Advocate, the Office of Workplace Services and (it appears) much of the court-based industrial work, including unlawful dismissals, agreement enforcement and Freedom of Association matters.

It is intended that Fair Work Australia will be a ‘one-stop shop to provide practical information, advice and assistance to employees and employers.’ Fair Work Australia will have the power to resolve unfair dismissals and enforce compliance with workplace laws. It will be split between a judicial and non-judicial arm to ensure its constitutionality.

The functions which will be administered by Fair Work Australia include:

• provide information and advice to employers and employees
• facilitating collective bargaining and ensuring good faith bargaining
• the reviewing and approving collective agreements
• resolving unfair and unlawful dismissal claims, as well as freedom of association matters
• assisting parties to resolve workplace grievances
• monitoring compliance and ensuring the application of workplace laws, awards and agreements
• overseeing secret ballots
• determining minimum wages and award conditions
• reviewing industry awards
• conducting inquiries and recommending changes to the national employment standards, and
• regulating unions and registered industrial organisations.

Fair Work Australia will replace the role of the Fair Pay Commission, determining increases to minimum wages in awards (in a similar way to the Fair Pay Commission), published each year in updated awards by 1 July.

Expanded set of legislative minimum standards

Federal Labor will expand upon the existing Fair Pay and Conditions Standard (FPACs), by implementing a set of 10 national employment standards that will apply to all employees in Australia. These 10 statutory minima cannot be avoided or traded away in bargaining. They are almost entirely consistent with the Australian Council of Trade Union’s (ACTU’s) list developed at its September 2006 congress and are as follows:

• standard 38 hour full-time working week, plus reasonable overtime
• parental leave—each parent has a right to 12 months parental leave. If one parent wants 24 months, the additional 12 months can be requested, and only refused on reasonable business grounds
• a right to request flexible working arrangements for new parents until their child reaches school age—again, only to be refused on reasonable business grounds
• four weeks annual leave for full-time employees (five weeks for shift workers) and pro rata leave for part-time employees
• personal, carers and compassionate leave—10 days paid personal/carers leave per year for full-time employees (pro rata rate for part-time employees), two days paid compassionate leave on each occasion and a further two days unpaid carers leave where required
• community services leave—employees entitled to leave for prescribed community purposes, including paid jury leave and unpaid emergency services leave
• public holidays will be guaranteed, with penalty rates payable to those who are required to work on those days
• employers must provide all new employees with a Fair Work Information Statement, which contains information about the employee’s rights and entitlements, including their rights to be a member of a union or not
• retention of minimum notice of termination requirements and the introduction of the 2004 Redundancy Test Case provisions for employees in workplaces with 15 or more employees (it is unclear whether this will extend to managerial/contract based employees), and
• Labor will develop (with the states) nationally consistent long service leave entitlements, with existing accruals being preserved transitionally until the implementation of the new scheme.

Ten additional minimum terms and conditions in industry awards

Labor plans to retain industry-based awards containing a further set of 10 minimum conditions. These award conditions will be enforceable and must be complied with unless set aside by an agreement.

Under Labor, award coverage will not be extended to those who were not traditionally award covered (managerial employees and the like). Awards will be reviewed for relevance every four years by Fair Work Australia and may only contain the following 10 minimum employment standards:

• minimum wages, including skill based classifications and career structures, incentive based payments and bonuses, wage rates and other arrangements for apprentices and trainees
• type of work, including permanent/casual, the facilitation of flexible working arrangements, including quality part-time and job sharing
• hours of work, rostering, rest breaks and meal breaks
• overtime rates
• penalty rates including for weekends, public holidays and shift work
• provisions for minimum annualised (additional) salary arrangements as an alternative to penalty rates, having regard to the industry, occupation and patterns of work
• allowances including reimbursement of expenses, higher duties and disability-based payments
• leave, leave loadings and arrangements for taking leave
• superannuation, and
• consultation, representation and dispute settling procedures.

Implement new unfair dismissal laws while retaining a limited small business exemption

Labor will significantly overhaul some aspects of the existing unfair dismissal regime, whilst retaining some exemptions for small business. It would appear that Labor will abolish all jurisdictional thresholds to accessing the unfair dismissal provisions under the Federal Act (although this remains to be seen), replacing these with three simple hurdles:

• for non-award covered employees, they must be earning under $98,200 per annum (indexed)
• no claims within the first six months of employment for most employees, and
• no claims within the first 12 months of employment for employees of employers with less than 15 employees.

The WorkChoices 100 employee threshold will be removed, as will the exemption for ‘genuine operational reasons’.

Labor plans to significantly overhaul the unfair dismissal process, and introduce a system similar to that adopted in the United Kingdom. Claims should be brought within seven days, and Fair Work Australia will hold an informal conference shortly after that. Hearing officers will be located in regional and suburban areas, and will be able to attend workplaces to determine claims. At the conference, the parties will be entitled to representatives for limited assistance, but must play an active role in the conference themselves.

The conference will determine the matter, with no formal evidence, witnesses, written materials or cross examination. Reinstatement will be the primary remedy, with capped compensation available as an alternative where reinstatement is not viable.

For small business (presumably less than 15 employees), Labor will introduce a ‘Fair Dismissal Code’, which if genuinely followed, will exempt the employer from a finding that the dismissal was unfair.

Federal Labor will retain the existing unlawful dismissal system, except that the determination of those claims will be conducted by the judicial arm of Fair Work Australia, presumably to avoid the cost and delay of court claims to resolve these matters.

Abolish Australian Workplace Agreements

The ALP has confirmed that Australian Workplace Agreements (AWAs) would be abolished ‘without apology’, and that there will be ‘sensible transitional arrangements that give businesses and employees certainty’. Comments from both Kevin Rudd and Julia Gillard seem to suggest that existing AWAs will be able to run their full term (presumably expiring automatically thereafter), with an ability for employees to ‘opt-out’ before the expiry of that term if they desire.

Consistent with statements to date, no other form of statutory individual contract will be available as a method of employment regulation.

Collective and good faith bargaining

All statutory agreements will be collective in nature. Collective employee agreements will be retained, but Fair Work Australia will be able to determine upon request that a workplace has majority support for a collective union agreement, which will then force the employer to collectively bargain with the union(s) in ‘good faith’.

Good faith bargaining with unions will not require employers to make agreements that they do not want to make. But, it will require employers to meet and confer with unions, provide necessary information, respond to requests and proposals, give genuine consideration to the needs of the other party and provide reasons for their responses and refrain from capricious or unfair conduct that undermines collective bargaining.

Fair Work Australia will have a capacity to assist good faith bargaining, and can make orders about that bargaining where participants are not bargaining in good faith.

Fair Work Australia will also be able to assist parties in intractable negotiating disputes, by determining matters to be included in agreements upon mutual request, or arbitrating employment terms and conditions where industrial action is causing significant loss and damage to the economy or threatening the safety and welfare of the community.

Agreements

• It appears as though a single collective agreement can extend to an entire work site, presumably allowing single ‘project agreements’ for all employees on construction and other infrastructure projects.
• Agreements will be able to operate for a maximum period of four years.
• Existing ‘greenfields’ agreements will remain available, but the option of employer greenfields agreements will be abolished.
• The ‘no-disadvantage test’ (or something akin to it) will be reintroduced for agreements, ensuring that the 10 minimum conditions in awards can be overridden, but only in circumstances where employees will be better off overall.
• Fair Work Australia will review agreements ‘on the papers’, effectively replacing and revising the old certification role of the AIRC, and approve agreements within seven days.
• Labor will abolish the restriction on including ‘prohibited content’ in agreements. It even appears as though agreement content may not be limited to matters pertaining to the employment relationship (although agreements may not contain ‘unlawful matters’). Parties will be entitled to include anything they want in agreements

Retain secret ballots as a prerequisite for protected industrial action

One concession to business is that the tougher stance on industrial action introduced by WorkChoices appears to have survived substantially intact in the Labor Policy.
The following are the key aspects of the Labor Policy:

• all industrial action during the life of an agreement will be unprotected
• all industrial action other than during good faith collective bargaining will be unprotected
• industry-wide pattern bargaining will be unprotected
• protected action will be available during good faith bargaining, but only after a secret ballot has approved the action, and
• strike pay would remain illegal.

Some key aspects of this area that are left unanswered by the ALP Policy to date include the following:

• whether industrial action will be available to employees on existing AWAs
• what tests will be built around the requirement to be genuinely bargaining in good faith before conducting a secret ballot, and how will this process be managed
• whether the immediate availability of common law remedies for unlawful industrial action will be retained, and
• whether Fair Work Australia will retain power to issue orders in relation to unprotected action, and importantly, whether those orders will be mandatory or discretionary.

Analysis

The ALP’s policy has been received with hostility from some sectors of the union movement, particularly in relation to secret ballots, the unprotected action regime, industry-wide bargaining and the unfair dismissal limitations. However, the ACTU and the unions did not seek to tamper with the policy at the National Conference.

Greg Combet from the ACTU said that the policy ‘does not deliver everything that unions were looking for’ but that unions would campaign for it because it ‘establishes important rights for working people.’

The Australian Chamber of Commerce and Industry has however criticised the policy, saying that the policy was ‘a great disappointment to business and a harsh and unnecessary hit that will damage the Australian economy’.
Without doubt, the existing WorkChoices laws are complex and contain considerable detail and regulation. Whilst WorkChoices has delivered a boon for business in terms of reducing restrictions, some employers have been critical at the cost of regulation and compliance.

Labor’s policy will certainly pare back many of the freedoms introduced by WorkChoices. However, significant aspects of the infrastructure remain, positive aspects for business have been retained (unprotected action regime, secret ballots) and many of the changes do not go further back that the Howard Government’s 1996 Reforms.

Many employers will and should already be relieved that Mr Rudd’s announcements represent a more employer-friendly approach than pursued by Labor under Mr Beazley.

The three most significant changes for business appear to be the abolition of AWAs, the introduction of compulsory collective and good faith bargaining and the proposal to establish Fair Work Australia and its expansive role under the new policy.

In particular, the abolition of the AIRC and the possible redundancy of its 44 members nationally will create an unprecedented change in the Australian industrial relations structure. It will also consolidate certain arbitral and judicial functions which have been separated for most of the post federation history of Australia’s employment regulation.

The way forward

If Labor were to win at an October or November poll, best estimates put the introduction of Labor’s new IR regime as close to the end of 2008. Despite the government’s early protestations about the constitutionality of Fair Work Australia, an appropriate division of the body into two parts may resolve this difficulty, minimising (if not eliminating) the prospect of a constitutional challenge to the laws.

Even if Labor does not gain control of the Senate, the minor parties might be expected to vote with Labor in support of the new laws. And in advance of that time, there are a range of measures that a Rudd Labor Government could implement immediately without Senate approval (subject to Senate disallowance), including abolishing the Building and Construction Industry Code of Practice and overhauling the Workplace Relations Regulations, including removing prohibited content restrictions in agreements.

This article was written by Tony Wood, Partner and Matthew Follet, Solicitor, Perth, and Duncan Fletcher, Senior Associate and Melanie Book, Solicitor, Perth.

More information

For information regarding possible implications for your business, contact a member of the Employee Relations team.