Summary of the proposed reforms to the Federal Industrial Relations system

On 9 December 2020, the Government introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) which seeks to make amendments to the Fair Work Act 2009 (Cth) (FW Act).

The Bill has only been introduced at this stage and is still pending consideration from the Senate Committee and scrutiny from the Houses of Parliament. A copy of the Bill can be accessed here.

There are five key areas of proposed reform and an additional schedule outlining new measures designed to enhance the powers of the Fair Work Commission (Commission). The key areas are:

• Award simplification
• Greenfields agreements
• Casual employment
• Enterprise bargaining
• Compliance and enforcement

Award simplification

The Bill seeks to amend awards in industries most affected by the COVID-19 pandemic including retail, hospitality, and licenced clubs by simplifying the classification of awards and introducing loaded rates and exemption rates, among other things. The Bill also seeks to extend the JobKeeper flexibilities in retail and hospitality industries, primarily to assist small businesses.

The Bill also establishes a co-design process for the Commission, the Ombudsman, employer groups and Unions to design a ‘Reg Tech’ product to make the payment of staff and employment simpler. The overall aim of that product is no doubt to reduce the underpayment of wages and entitlements to employees due to Award complexities.

Greenfields agreements

Currently, the FW Act only allows for greenfields agreements to operate for 4 years. However, the amendments to the FW Act proposed by the Bill would permit 8-year agreements in certain circumstances relating to the construction of major projects. If the expiry of the greenfields agreements is after 4 years, the agreement must have a term providing for annual pay increases for the nominal life of the agreement.

Casual employment

The Bill also proposes the inclusion of a definition of ‘casual work’ in the FW Act being a ‘firm advance commitment’ of ongoing opportunities. The meaning of ‘firm advance commitment’ will also be exhaustively defined in the FW Act and will include indicators of conduct that fall within the definition.

In response to the recent decisions of WorkPac Pty Ltd v Rossato [2020] FCAFC 84 (summarised here) and WorkPac Pty Ltd v Skene [2018] FCAFC 131 (summarised here), where casual employees who were working continuous and regular hours were able to be paid both annual leave and a casual loading, the Bill permits casual leave loadings and special pay to count towards any entitlements a casual employee may have if they were deemed to be a part-time or full-time employee. This prevents a situation of ‘double dipping’.

Casual workers must also be offered a permanent part-time or full-time job after being employed for 12 months if they have worked regular hours for the previous 6 months, unless the employer has reasonable grounds not to offer such a role. The employee can opt to remain casual and seek to convert every 6 months, provided they are still eligible. Currently, a conversion from casual employment can only occur if the specific modern award allows for it.

Enterprise bargaining

The Bill aims to increase the number of Australians covered by enterprise agreements. The Commission would, under the proposed legislation, no longer need to be satisfied that the terms of the enterprise agreement do not exclude the safety net provided by the National Employment Standards (NES) but instead the agreement must include a term detailing the interaction between the NES and enterprise agreements. These agreements would then need to be approved by the Commission within 21 days under the new reform.

The Bill also seeks to revamp the ‘better off overall test’ (BOOT). The Commission would also be provided with the discretion to approve an enterprise agreement that leaves some workers worse off if the business has been affected by COVID-19. Any agreement approved under this discretionary power will expire after 2 years at most.

Compliance and enforcement

The Bill introduces criminal offences for deliberate, dishonest and systematic underpayments of one or more employees, punishable for up to 4 years imprisonment or imposing significant fines of up to $5.5M. Other culpable conduct includes sham contracting and the failure to comply with a compliance notice.

The small claims cap is proposed to increase from $20,000 to $50,000 and the Magistrates Court would be able to refer small claim matters to the Commission for conciliation and consent arbitration under the new reform.

Further, the amendment proposed by the Bill prevents business from publishing job advertisements with pay rates below the minimum wage.

Fair Work Commission

The Commission will be given greater powers under the reform to deal with appeals ‘on the papers’, where appropriate, and have greater powers to revoke or vary decisions relating to enterprise agreements and workplace determinations.

In respect of unmeritorious applications, the Commission would be empowered to dismiss applications that are misconceived, lacking in substance or otherwise an abuse of process. The Full Bench of the Commission would also be able to order a person to not make further applications, mimicking the powers of the Administrative Appeals Tribunal in dealing with vexatious applications.

The Commission would also be tasked with assisting small businesses to remain compliant with the FW Act. Consequently, the Fair Work Ombudsman will be funded to establish a new Employer Advisory Service, provided that the reforms take place as proposed.

Conclusion

The Minister for Industrial Relations has stated that the changes proposed by the Bill are not radical but are rather a balanced response to the problems in the Federal industrial relations area that have been exacerbated by COVID-19. Unions have been pushing back, with Sally McManus of the Australian Council of Trade Unions voicing the Union’s concerns about the Bill – namely that it undermines the legal rights and protections for employees by permitting unfair agreements.

We will continue to provide updates to our clients with respect to the progress of, and any further changes to, the Bill.

For more information please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, Ganesh Krishnan on +61 8 8217 1395 or gkrishnan@normans.com.au or Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au.