Recommended amendments to the Act

Implications for employers

The Safety Net

A.

Provide that employees are unable to accrue annual leave while absent from work and receiving payments of workers compensation.

The Act currently provides that if:

• an employee is absent from work and in receipt of workers compensation; and
• a relevant compensation law does not prevent an employee from doing so;

the employee will continue to accrue and is able to take annual leave whilst in receipt of workers compensation.

B.

Where an employee requests extended parental leave, a meeting must be held to discuss the request unless the request is accepted.

Currently the Act provides that an employee may request an extension to unpaid parental leave for up to an extra 12 months. There is no current requirement to have a meeting to consider the request.

C.

Special maternity leave taken by an employee should not reduce the employee’s entitlement to 12 months parental leave.

The Act currently provides that the entitlement to 12 months parental leave is reduced by any special maternity leave taken by the pregnant employee.

D.

The circumstances in which employees may request flexible working arrangements:

be extended to include a wider range of caring and other circumstances; and

the employer and the employee must hold a meeting to discuss the request unless the request is accepted.

The Act currently provides that an employee, who is a parent or caregiver of a child under school age or a disabled minor, may request a change in working arrangements to assist them in their caring responsibilities. Requests must be made in writing.

The recommendation provides that flexible working arrangement requests be extended to include a wider scope of caring responsibilities – for example caring for the aged or persons with long term illness. Further, if the recommendation is adopted, requests may only be refused where at least one meeting has been held between the employer and the employee to consider the request.

E.

Provide that annual leave loading may only be paid on termination of employment if a relevant modern award or enterprise agreement provides for it.

The Act currently provides that upon termination, employees are to be paid accrued annual leave at the amount that would have been paid if the employee had taken the period of annual leave (which arguably includes annual leave loading). The recommendation, if adopted, would make it clear that annual leave loading would only be payable upon termination of employment if an applicable modern award or enterprise agreement specifically requires the payment to be made.

F.

Commonwealth, state and territory governments standardise public holidays under the NES on which penalty rates are payable.

The Act currently provides that penalty rates are payable on public holidays when the public holiday has been declared or prescribed under a relevant law of that jurisdiction. Public holidays within various Australian jurisdictions vary between 10 and 13 days resulting in increased public holiday penalty payments in some jurisdictions. The recommendation seeks to limit penalty rates to 11 nationally recognised public holidays regardless of the jurisdiction. This will not necessarily result in the number of public holidays declared or prescribed in each jurisdiction being altered – but rather just the public holiday that attract penalty rates.

G.

Individual Flexibility Agreements (IFAs) under relevant modern awards and enterprise agreements be:

• Extended to include non-monetary benefits.

• Notice of termination of IFA’s be extended to 90 days.

• Employer requirement to notify the Fair Work Ombudsman (FWO) of IFAs entered into.

• Provision of a statutory defence to employers entering IFAs where the employer has complied with the notification requirements and believed, on reasonable grounds that it met the statutory requirements including the better off overall test (the BOOT).

The Act currently provides that IFAs may be entered into so long as the employee is "better off overall" than the relevant modern award or, in relation to enterprise agreements, than the employee would have been if no IFA had been entered into (the BOOT). The recommendation seeks to:

• Expand the BOOT to include non-monetary benefits provided that the non-monetary benefit is proportionate to the monetary benefit foregone – currently in many circumstances IFAs are limited to arrangements to when work is performed; overtime rates; penalty rates; allowances; and leave loading.

• Extend the current notice of termination of an IFA from 28 days to 90 days unless a lessor period is agreed to in writing between the employer and the employee.

• Require employers to notify the FWO of the IFA at the time agreement is reached – currently there is no requirement to notify the FWO of IFAs.

• Provide employers with a defence against an alleged contravention of a flexibility term, where it entered into an IFA, notified the FWO of the IFA, believed the IFA satisfied the BOOT and had reasonable grounds for believing it did.

• In addition, make it clear the current law that IFAs may only be entered into with current employees and not potential employees – that is preventing offers of employment being conditional upon the signing of an IFA.

Enterprise Agreements

H.

Regarding bargaining orders, the following recommendations were made:

• Allow bargaining orders to be made at any time prior to the nominal expiry date of an enterprise agreement where negotiations have commenced.

• Provision that a Notice of Employee Representational Rights may only include matters prescribed by the relevant section of the Act.

• Notices of Employee Representational Rights be filed and published by FWA.

• Provide that an individual union offical cannot be appointed as a bargaining representative for employees of which the offical's union does not have coverage.

The Act currently provides that:

• Applications may currently only be made within 90 days of the expiry of a current enterprise agreement.

• Employers may include other matters in a Notice of Employee Representational Rights that are not prescribed by the Act. This recommendation seeks to prohibit the ability of employers to expand the notice further than that prescribed by the Act.

• Employers provide employees with a Notice of Employee Representational Rights. The unions have argued that in many cases they have not been notified that bargaining has been commenced or, in some circumstances, an agreement has been made without any real bargaining occurring.

• Currently union officials may potentially become bargaining representatives as an individual ie not in their union capacity to represent employees of whom their union would not have coverage of. The recommendation seeks abolish any ability of individual union officials to do so.

I.

Amendment to allow FWA to conciliate a bargaining dispute of its own motion rather than being instigated upon an application being made.

Currently, either party may apply to FWA to have it deal with a bargaining dispute. This recommendation would allow FWA to call parties before it and undertake dispute resolution functions where parties cannot resolve a bargaining dispute (including greenfields agreements).

J.

Prohibition of ‘opt out’ clauses in enterprise agreements.

Enterprise agreements may currently include ‘opt out’ clauses for individual employees who would normally be covered by the enterprise agreement to elect to no longer be covered by it. Concerns with opt out clauses include that they may be:

• used to affect the outcome of agreement making by having a group of employees vote on the agreement and then opt out; and

• employees who opt out may then seek to re-open bargaining and displace agreements currently in operation.

K.

The following recommendations were made regarding greenfield enterprise agreements:

• Negotiations for Greenfield agreements to be subject to good faith obligations.

• Employers intending to negotiate a Greenfield agreement take all reasonable steps to notify eligible unions.

• Allow FWA on its own motion, once Greenfield agreement negotiations have reached an impasse, conciliation has failed and a specified time period has passed, to conduct a limited form of arbitration.

The Act currently provides that:

• There is no requirement on parties to a Greenfield agreement negotiation to act in good faith. This recomendation will apply the good faith obligations.

• Employers may negotiate greenfields agreements with one of the unions entitled to represent proposed employees.

• Employers may negotiate greenfields agreements with one of the unions entitled to represent proposed employees. The recommendation seeks to formalise a requirement that employers notify all unions with eligibility with the effect of potentially increasing the amount of unions which the employer will be required to negotiate with.

• There is limited ability for FWA to assist with bargaining issues arising from Greenfield agreement negotiations. Along with the recommendation made at point I, this would allow FWA to intervene in negotiations and arbitrate to reach an outcome including the use of 'last offer' arbitration, forcing to some extent, parties to reach a realistic agreement rather than having one imposed on them by FWA.

Right of Entry

L.

The following recommendations were made regarding right of entry:

• Provide FWA with greater power to resolve dispute regarding the frequency of visits of union officials.

• Union officials are entitled to enter premises in relation to a member who continues to be represented by the union but is no longer employed by the employer.

The Act currently provides that:

• Although some scope is provided under the current Act, there is no clear ability or obligation for FWA to deal with excessive union visits to a worksite. The recommendation seeks to provide FWA discretion to deal directly with these matters and including the ability to make orders to restrict the amount of visits by union officials to a particular worksite.

• A union's right to enter a workplace to investigate a suspected contravention is currently extinguished if the employer terminates the employee's employment.

M.

Unfair Dismissal

Recommendations regarding unfair dismissal include:

• Those employees engaged for a specific period or for a specific task be included in the definition of 'dismissed'.

• Extension of the time limit for lodging an unfair dismissal application be extended to 21 days.

• The Act be amended to provide that FWA is not required to hold a hearing where it is considering dismissing an unfair dismissal application; an application regarding a settlement agreement or where the employee failed to attend proceedings or comply with an order.

• Allowing FWA to make orders where a party has unreasonably failed to discontinue an unfair dismissal proceeding; failed to agree to terms of settlementwhich could have lead to discontinuance of an application, or has undertaken an unreasonable act or omission which caused the other party to incur costs.

The Act currently provides that:

• Employees engaged for a specific period (where the employment is terminated by the contract coming to an end) or task, are not included in the definition of 'dismissed' and the obligations imposed on employers when terminating other employees do not extend to specific period or task employees, unless the purpose of the employer engaging the employees under a specific period or task arrangement was to avoid its dismissal obligations. The recommendation seeks to amend the definition to include employees who have been terminated at the end of a specific period, on the completion of a task or at the end of the season and consequently widen their potential access to make applications for an unfair dismissal remedy.

• Employees have 14 days in which to lodge an unfair dismissal application. The recommendation seeks to amend it to 21 days.

• FWA holds hearings to determine if an application should be dismissed, where settlement terms are not being adhered to or, where employees fail to attend proceedings to comply with orders. The recommendation suggests a process whereby each party may submit material for consideration and FWA would make a decision on the papers, without the need to hold a hearing.

• Cost orders are only allowable in certain limited circumstances. The recommendations seek to broaden this aspect to include unreasonably failing to discontinue proceedings, failing to agree to terms of settlement or where a party undertakes an unreasonable act of omission causing the other party to incur costs.

N.

General Protections

Recommendations in relation to general protections include:

• Reducing the time limit for applications.

• Amend the Act to provide that the central consideration for determining adverse action claims be the subjective intention of the employer in taking the alleged adverse action.

• Where allegations of 'sham contracting' ie misrepresenting an employment relationship as one of employer and employee are made, the Act be amended to provide that it will constitute a defence where an employer can demonstrate that at the time the representation was made, it believed that a contractor arrangement and not a employment contract, and could not be reasonably be expected to know otherwise.

The Act currently provides:

• General protection applications relating to dismissal may be made with 60 days of the dismissal. The recommendation seeks to amend this to 21 days.

• A reverse onus of proof applies to adverse action claims. That is, the applicant need only allege that the employer took adverse action - that is then incumbent on the employer to demonstrate otherwise. The recommendation seeks to provide that where an employer is of the belief that their action was lawful; honestly held and reasonable considering all the circumstances, that it will constitute a defence.

• It is a defence if an employer did not know and was not reckless as to whether it misrepresented employment as an independent contractor arrangement rather than one of employment. The recommendation seeks to provide a defence where the employer genuinely believed at the time it made the representation that the agreement was a contractor agreement, and it could not have been expected to know otherwise.