Review of the Fair Work Act

Review of the Fair Work Act

October 2012

On 2 August 2012, Minister for Employment and Workplace Relations, Financial Services and Superannuation the Hon Bill Shorten MP released the report of the Fair Work Act Review Panel.

On 15 October 2012 Minister Shorten announced the Government would proceed with a first tranche of amendments to the Fair Work Act implementing 18 of the Review Panel’s 53 recommendations before the end of 2012. The Government will continue the consultation process with stakeholders on the remainder of the recommendations.

The Minister’s press release is available here. The report is available here.

Contents

Background

The Review

Findings

Recommendations: Flexibility and Productivity

Recommendations: Equity in the Workplace

First Tranche of Amendments

Next Steps

Background

The Fair Work Act 2009 and the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008were implemented to create a fairer national system of industrial regulation in Australia. This legislation was part of comprehensive workplace relations reforms conducted by the Rudd Government shortly after assuming office in 2007. The reforms included abolishing key elements of the pervious Government’s WorkChoices legislation, including the Australian Workplace Agreements (AWAs).

In introducing the legislation, then Minister for Employment and Workplace Relations, the Hon Julia Gillard MP, stated that the intention of the legislation was to create anindustrial relations system that would:

provide a strong safety net for employees;
promote workplace flexibility;
deliver an enterprise-level collective bargaining system to drive productivity;
create good faith bargaining rules;
ensure tough sanctions against unprotected industrial action; and
provide strong but simple protections against unfair dismissal.

The majority of the Fair Work Act commenced operation on 1 July 2009 and the new safety net, comprising the National Employment Standards and modern awards, commenced on 1 January 2010.

Due to the scale of the reforms implemented under this legislation, the Government made a commitment in the Explanatory Memorandum to the Fair Work Bill 2008 to review the operation of the legislation two years after itscomplete commencement.

The Review

On 20 December 2011, Minister Shorten announced the details of this Review. The Fair Work Act Review Panel was established to examine the extent to which these two pieces of legislation are operating as intended, and identify possible areas where the legislation could be improved.The Review Panel consisted of Reserve Bank Board Member DrJohn Edwards; former Federal Court Judge, the Honourable Michael Moore; and noted legal and workplace relations academic ProfessorEmeritusRon McCallumAO

The Review Panel’s report was initially is expected to be delivered in May 2012, however following a request for an extension on time, the final report was delivered to Minister Shorten on 15 June 2012.

The Minister’s Press Release announcing the review, along with the Terms of Reference and biographies of each panel member is available here.

On 18 January 2012, the Fair Work Act Review Panel released a background paper and outlined the timing of the Review’s submission process.The background paper is available here.

Written submissions were received until 7 February 2012. Supplementary submissions, including comments on the submissions of other participants, were received until 2 March 2012.Throughout the review process, the Panel received more than 250 written submissions. Public submissions can be viewed on the submissions page and the supplementary submissions page.

In addition to written submissions, the Review Panelheld discussions and roundtable meetings with all key employer and employee representatives. These discussions had a particular focus on people less likely to make written submissions, including low paid workers and workers from non-English speaking backgrounds.

Findings

The Review Panel has found the Fair Work legislation in general to be operating as intended and in accordance with the objectives of the legislation. However, the Review Panel’s Report identifies areas where the operation of the legislation could be improved, and the Review Panel hasmade a total of 53 recommendations for improvements in the Report.

The Review Panel concludes that since the Fair Work Act commenced, it has had positive effects on wages growth, industrial disputation, the responsiveness of wages to supply and demand, employment growth and the flexibilityof work patterns.

However, the Review Panel found that productivity growth has been disappointing during the Fair Work Act framework, as well as during the two preceding industrial relations frameworks, including WorkChoices.While the Panel was not persuaded that the legislative framework for industrial relations accounts for this productivityslowdown, a number of its recommendations are designed to allow for improved productivity, while also enhancing equity in the workplace.

Some of the more than 250 submissions received during the review process recommended the reinstatement of elements of the WorkChoices legislation. These included easier access to arbitration in long running disputes and restricting matters for negotiations in enterprise bargaining agreements to those permitted under the WorkChoices framework. Howeverthe Review Panel rejected these recommendationsas being contrary to the objects of the Fair Work Act.

Recommendations: Flexibility and Productivity

Of the 53 recommendations, a number were designed to significantly encourage flexibility and productivity, including:

The institutions created under the Fair Work Act , Fair Work Australia and the Fair Work Ombudsman, extend their role to include actively encouraging more productive workplaces, including through promoting best practice in the productivity enhancing provisions of agreements, developing model productivity clauses for awards and agreements, and sponsoring training workshops for employers and employees on how to enhance workplace productivity.
The provisions in relation to individual flexibility arrangements be amended to make Individual Flexible Agreements (IFA) easier to access and more attractive to both employers and employees. The amendments should include: a requirement that enterprise agreements include the model flexibility term as a minimum, clarification of the Better Off Overall Test to clearly include non-monetary benefits, the extension of the minimum term of an IFA to 90 days, a requirement to notify the FWO of the existence of the IFA, and new defence against a subsequent claim that an employer believed on all reasonable grounds that the requirements for an IFA had been met. However, the Panel has rejected the view that assent to an IFA may be required as a precondition to gaining employment.
Greenfields agreement provisions be made consistent with the general enterprise bargaining stream by applying suitably modified good faith bargaining rules to negotiations for proposed agreements. Given the national significance of some greenfields projects and the need for assurance in project design and investment, the Panel also recommends a form of arbitration be available if the parties are unable to reach agreement within a suitable time frame.
To enhance its role in dispute settlement, FWA be given the power to initiate compulsory conciliation when the parties have been unable to reach agreement, including in greenfields negotiations.
To support the objective of good faith bargaining, the legislation be amended to require that protected action ballot orders can be issued only after bargaining has commenced.
The Government consider amending the transfer of business provisions to make it clear that when employees, on their own initiative, seek to transfer to a related entity of their current employer they will be subject to the terms and conditions of the new employer entity.
The time limits for lodging unfair dismissal applications and for general protections claims (involving dismissal) be amended to align them to 21 days, FWA be given the power to dismiss unfair dismissal applications in certain circumstances, and FWA be able to deal with applications by way of a hearing process that is informal, inquisitorial and determinative. Furthermore, FWA should have the power to make costs orders against a party that is unreasonably pursuing a proceeding.
Division 7 of Part 3-1 be amended to provide that the central consideration as to the reason for adverse action is the subjective intention or intentions of the person or persons taking the alleged adverse action.

Recommendations: Equity in the Workplace

In order to increase workplace equity or remove current inequities, the Panel recommends that:

The Fair Work Act be amended to prohibit enterprise agreement clauses that permit employees to opt out of the agreement, and to prohibit the making of an enterprise agreement with one employee.
The right to seek flexible work arrangements be extended to a wider range of caring and other circumstances.
If an employee requests additional unpaid parental leave or flexible work arrangements, the employer must hold a meeting with the employee to discuss the request, unless the employer has agreed to the request.
Taking unpaid special maternity leave should not reduce an employee’s entitlement to unpaid parental leave.
Notices of employee representational rights address only the relevant statutory requirements, be lodged with Fair Work Australia (FWA) and published on FWA’s website.
Good faith bargaining obligations be extended when bargaining for a new agreement commences prior to 90 days before the expiry of an existing agreement, and to variations of agreements.
The protected action ballot processes be improved, including by allowing electronic voting and allowing eligible union members and employee bargaining representatives at the time of a protected action ballot to vote in the ballot.
Employers be required to continue to provide accommodation even when employees are taking protected industrial action.
FWA be given greater power to equitably resolve disputes over the right of union officials to make workplace visits.

First Tranche of Amendments

On 15 October 2012, following a consultation process, Minister Shorten announced the Government would proceed with amendments to the Fair Work Act to implement a number of the Review Panel’s recommendations. According to the Minister the consultation process revealed a broad support for around one third of the Review Panel’s 53 recommendations. The Government is committed to introduce these amendments to Parliament this year. Parliament will sit for the last time in 2012 on 29 November.

Most of the Review Panel’s recommendations surrounding unfair dismissals will be implementedwith the first tranche of amendments. Most significantly, the Government will extend the time limit for lodging unfair dismissal claims from 14 to 21 days, whilstreducing the time limit for lodging adverse action claims from 60 to 21 days. Finally,the Government will introduce amendments to the Act allowing Fair Work Australia to demand more information from the applicant regarding on the circumstances of the dismissal, as well as allowing it to make cost orders against unreasonable claims.

Other proposed amendments to the Act include changes to enterprise bargaining, preventing unions from representing workers outside their coverage, and prohibiting opt out clauses for employees on enterprise agreements.

Finally, a range of smaller technical amendments to the Act were announced, these included changing the name from Fair Work Australia to a title that more aptly denotes its functions, possibly to Fair Work Commission.

The full list of recommendations welcomed by the Government available here

Next Steps

The Government will continue the consultation process with stakeholders on the remainder of the Review Panel’s recommendations. The Government will commence a Committee of Industrial Legislation process allowing members of the tri partite National Workplace Relations Consultative Council, State and Territories Governments to comment on draft legislation before introducing into the Parliament.

More information on the review of the Fair Work Act Review is available here.