Allens

Workplace Relations

Client Update: Review into Fair Work Act released

3 August 2012

In brief: The Federal Government's review into the Fair Work Act has recommended amendments, but there is no prospect of substantive change, and whatever change does occur will be delayed while further consultation takes place. Partner Tim Frost (view CV) and Senior Associate Andrew Stirling look at the main recommendations.

Background

In December 2011, the Federal Government commissioned a review into the operation of the Fair Work Act 2009 (Cth). Allens entered a submission to the review panel, based on our experience in assisting clients with the challenges that the Act poses.

The review panel's report, released by the Government on 2 August, makes 53 recommendations for amendments to the Act.

The recommendations will disappoint anyone holding out hope for substantive change. Unsurprisingly, the review embraces the Government's view that the Act is generally working well. As a result, almost all of the recommendations would adjust the Act in small ways that are unlikely to materially change employee relations in Australia.

Employers will see many of the amendments as improvements, but will be disappointed by some of the recommendations (and by the absence of recommendations that may have materially improved the Act).

There is no prospect of imminent change.  The Government has already announced its intention to undertake further consultation before legislation is put before Parliament to implement the recommendations. Even then, the political reality is that the Government faces significant hurdles (on its left and right) in getting any amendments through Parliament.

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Key recommendations

Overturning the Barclay decision on general protections

The review panel recommended legislating to overturn the majority decision in Barclay if the High Court does not do so. The panel decided that employers should be able to defend general protections claims if they can prove that, subjectively, the adverse action was not motivated by the employee's workplace right or participation in lawful industrial activity.

Excluding voluntary internal transfers from transfer of business rules

The review panel recommended that the transfer of business rules not apply if an employee voluntarily transfers between related entities (eg if the employee applies for a new role within a group of companies). This change would greatly facilitate the transfer of employees between group companies where different enterprise agreements apply to companies within the group.

New time limit for making unfair dismissal and general protections claims

The review panel recommended that the time limit for bringing unfair dismissal and general protections claims should be a uniform 21 days. This is seven days longer than employees currently have to bring unfair dismissal claims, but 39 days less time than employees currently have to bring general protections claims.

Costs of unfair dismissal claims

The review panel suggested a reduction in the current threshold for awarding costs to successful parties in unfair dismissal claims. This would allow Fair Work Australia (FWA) to award costs more readily and may act to discourage claims without merit.

Removing ambiguities

The review panel recommended a number of technical amendments to remove ambiguities in the Act. For example, the review panel suggested an amendment to clarify that annual leave loading does not need to be paid on accruals paid out on termination (unless this is required by an industrial instrument).

New administrative burdens

Employers will not agree with all of the review panel's recommendations. For instance, the review panel has suggested new administrative and procedural burdens, including a new requirement to lodge individual flexibility arrangements and notices of employee representational rights with FWA.

No 'strike first, talk later'

The review panel recommended removing the right for unions to take protected industrial action before enterprise bargaining has commenced (as occurred in the JJ Richards case).

Greenfields agreements

The review panel has suggested requiring employers to notify all relevant unions that it is proposing to enter into a greenfields agreement. This may lead to demarcation disputes over agreement coverage. We do not see this as a positive proposal, particularly when coupled with the review panel's recommendation that the good faith bargaining requirements be applied to greenfields agreements.

Right of entry

The review panel has recommended that FWA be empowered to resolve a broader range of right of entry disputes between employers and unions. This proposal includes a suggestion that FWA play a greater role in determining where unions can hold meetings, which we are concerned will create greater disputation on that issue.

Individual flexibility arrangements

In addition to recommending that individual flexibility arrangements (IFAs) be lodged with FWA, the review panel recommended some improvements that may make IFAs more attractive to employers. However, overall, we doubt that the recommendations would result in a significant increase in the take up of IFAs.

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