Aboriginal Health & Medical Research Council WorkChoices 9 May 2006 Michael Brennan Senior Associate Jaclyn Foley Solicitor 4016618

Introduction Most significant change to Australia’s industrial relations system since the system of compulsory conciliation and arbitration was established 100 years ago By using the Commonwealth’s power to regulate trading and financial corporations, the Government intends to create a unitary industrial relations system 4016618

Introduction (cont) The Government has stated that the legislation will make Australia’s industrial relations simpler and fairer However, the Act and Regulations are 1700 pages long and extremely complicated

Overview of Presentation Today’s presentation will focus on the following areas: national system the new standard changes to award system the move from State to Federal regulation changes to agreement making system unfair dismissal record keeping requirements

Who will be covered by the new system? Constitutional corporations and their employees A corporation is a constitutional corporation if its financial or trading activities are “significant”. All employers and employees in Victoria Organisations registered under the Workplace Relations Act Employees and employers within a Territory

Who will be outside the new system? Unincorporated associations and their employees (other than in Victoria) Partnerships and their employees (other than Victoria) Public service employers and employees (other than in Victoria) A key change - more than 85% of the employed workforce will be covered by the new system and will be excluded from the State IR systems

What will remain covered by the State systems? Occupational health and safety Workers compensation Long service leave Discrimination and EEO

Australian Industrial Relations Commission (AIRC) With limited exceptions, the AIRC will no longer exercise compulsory powers of conciliation and arbitration It will instead provide voluntary dispute resolution services

Today I will be dealing with the substantial changes to federal awards from the WorkChoices legislation. Accordingly to the Government’s WorkChoices’ Summary “we have too much red tape, too much complexity, and too much confusion”. However, the WorkChoices Bill certainly does not reduce the complexity of awards. If any, it just made the minimum wages and award system more complex. In a nut shell, awards will be of decreasing effect over time, thus creating incentives for employees to agree to workplace agreements or individual agreements with their employers. The New Standard 4016618

Australian Fair Pay and Conditions Standard (Standard) New concept – 5 minimum legislative entitlements Minimum wages set and adjusted by the AFPC (FMW/APCS) Maximum ordinary hours of work – 38 hours per week and reasonable additional hours Annual leave – four weeks per annum Personal and carer’s leave – 10 days per annum Parental leave – 12 months unpaid Significant change – applies to contracts of employment and all workplace agreements These constitute the safety net. The AFPC standards are the statutory minimum standards that apply to all employees of constitutional corporations. The standards will underpin all awards and agreements. The 5 standards are: 1. annual leave of 4 weeks, cumulative from year to year and payable on termination; 2. Personal and carer’s leave of 10 days per year with an additional 2 days unpaid carer’s leave. The personal leave may be taken as personal sick leave or carer’s leave. Although it is cumulative, a maximum of 10 days paid leave may be taken each year; 3. 12 months unpaid parental leave; and 4. Maximum ordinary hours of work of 38 hours per week averaged over 12 months plus reasonable additional hours which must be paid. 4016618

Australian Fair Pay Commission (AFPC) Replaces the AIRC as the wage setting and wage review body AFPC to determine the timing, scope and frequency of wage reviews, how they are conducted and when implemented Can inform itself about its functions (including effect of its decisions) The Australian Fair Pay Commission is a new body which replaces the AIRC as the wage setting and the wage review body. The AFPC has been criticise as lacking the AIRC’s independence due to the following: Unlike the AIRC, AFPC appointments are for a limited term; and there is no guarantee of union representation on the AFPC (until now tripartisn has been a key agreement in the success of industrial democracy). The AFPC has also been criticised as having a lack of transpancy in the manner in which it would come to its decisions. Must give written decisions. Decisions must be unanimous. Instead of arbitrated wage decisions by the AIRC, wages will simply be determined by the AFPC, possibly but not necessarily, with consultation and pursuant to very general guiding principles. So at this stage, not much is known about how and when wage reviews will be conducted. 4016618

Today I will be dealing with the substantial changes to federal awards from the WorkChoices legislation. Accordingly to the Government’s WorkChoices’ Summary “we have too much red tape, too much complexity, and too much confusion”. However, the WorkChoices Bill certainly does not reduce the complexity of awards. If any, it just made the minimum wages and award system more complex. In a nut shell, awards will be of decreasing effect over time, thus creating incentives for employees to agree to workplace agreements or individual agreements with their employers. Awards 4016618

AH & MRC – Award Coverage Main Award – Health Services Union of Australia (Aboriginal & Torres Strait Islander) Award 2002 (Federal award) Some AMS covered by state awards We will look at what happens to: Federal awards; and State awards under WorkChoices

Changes to Federal Awards The changes are: rationalisation of all awards within 3 years to a limited number of industry-based awards (maybe) simplifying awards by making all non-allowable matters unenforceable immediately on commencement of WorkChoices permanent “removal” from award system once an employee’s employment becomes subject to an agreement made under the new legislation limited powers of AIRC to make and vary awards Awards no longer the vehicle for wages. Awards no longer under pin agreements for purposes of the no-disadvantage test. The 4,000 existing awards will be reduced to a small number, possibly 20, of industry based awards. An award is displaced by an agreement once an employee becomes subject to an agreement. Once this happens, employees are permanently exercised from that award, and the award will never apply to them again even once the agreement is terminated. 4016618

Changes in Federal Awards (cont …) Protected Award Terms v Preserved Award Terms

Content of Awards – Preserved Entitlements “Preserved award terms” Annual leave, personal and carer’s leave, parental leave (prevail over Standard if more generous) Long service leave Notice of termination Jury service Superannuation (until 30 June 2008) No variation Taken to be included in any replacement award (original coverage remains) Preserved but frozen. According to WorkChoices, although these entitlements are not allowable, they will be preserved in awards so employees “continue to enjoy the benefit of these provisions in their current awards”. Included to cover employees with more beneficial entitlements in awards. However, these entitlements are also covered by existing State legislation, so the effect of making them preserved is to further override the operation of the State legislation. 4016618

Protected Award Conditions “Protected” award conditions - specified allowable conditions that are protected for employees entering into agreements : rest breaks incentive based payments and bonuses annual leave loadings monetary allowances overtime and shift work loadings penalty rates Protected award conditions can be expressed excluded or modified by a Workplace Agreement Relevant for agreement – making only. Protected award conditions are allowable award matters which would otherwise remain in awards, however, their protected status is in respect of agreements. When parties enter into an initial agreement or any subsequent agreement, they must either include the protected award conditions or expressly exclude or modify them. 4016618

Transition of State Awards & Agreements Today I will be dealing with the substantial changes to federal awards from the WorkChoices legislation. Accordingly to the Government’s WorkChoices’ Summary “we have too much red tape, too much complexity, and too much confusion”. However, the WorkChoices Bill certainly does not reduce the complexity of awards. If any, it just made the minimum wages and award system more complex. In a nut shell, awards will be of decreasing effect over time, thus creating incentives for employees to agree to workplace agreements or individual agreements with their employers. 4016618

Transition of State Awards and Agreements State awards and agreements applicable to constitutional corporations will “transfer” to the Federal system and become: Notional Agreements Preserving State Awards Preserved State Agreements Binding on current parties to State agreements and those subject to State awards

Notional Agreements Preserving State Awards Will cease to operate after 3 years or earlier if replaced by a new Federal agreement No prohibition on industrial action during 3 year period If not replaced – transition to Federal award (preserved award terms retained in new rationalised Federal award) AFPC Standard applies (except hours of work) if more generous Cannot contain “prohibited content”

Changes to Agreement Making System 4016618

Agreements - Overview Six types of “Workplace Agreements” AWAs employee collective agreements union collective agreements union greenfields agreements employer greenfields agreements multiple business agreements

Content of Workplace Agreements Required content: Nominal expiry date – 5th anniversary from lodgment where agreement silent (12 months for Greenfields agreements) Dispute settlement clause – model clause where silent Express exclusion or modification of “protected award conditions” (if required): public holidays, rest breaks, incentive based payments and bonuses, annual leave loadings, specified allowances, penalty rates, shift/overtime loadings, prescribed matters AFPCS must be met during life of agreement Employer must not be reckless as to lodgment of agreement containing prohibited content

Content of Workplace Agreements (cont) Prohibited content: restrictions on employing labour hire workers / contractors prohibitions on AWAs allowing for industrial action during the term of an agreement providing for trade union training leave, bargaining fees to trade unions or paid union meetings mandating union involvement in dispute resolution providing that any future agreement must be a union collective agreement providing a remedy for unfair dismissal matters that do not pertain to employment relationship or allow or require breach of freedom of association

Making Agreements Key changes: Similar procedures for AWAs and collective agreements Employees to have seven days’ access to agreement and information statement lodgment with OEA within 14 days of approval (together with declaration) Notify employees of lodgment within 21 days (collective agreements only) Agreement commences operation on day of lodgment (even if requirements not met)

Termination of Agreements Workplace Agreements can be terminated after nominal expiry date: by agreement in accordance with terms (after NED) upon 90 days’ notice (after NED) Revert to Australian Fair Pay and Conditions Standard (plus protected Award Conditions)

Interaction of Industrial Instruments AWAs will exclude both collective agreements and awards Collective agreements will exclude awards (completely) but will not be able to exclude AWAs Collective agreements - first in time prevails prior to nominal expiry date New AWAs replace old AWAs

Transitional arrangements for current Federal Agreements Pre-reform certified agreements continue to operate until replaced or terminated (in accordance with the old termination provisions) Pre-reform certified agreements can be replaced prior to their nominal expiry date (however protected action cannot be taken until after that date) Pre-reform certified agreements continue to prevail over awards to extent of inconsistency Dispute resolution in accordance with old s170LW Only content stripped is “anti-AWA” provisions The Standard does not apply

Termination of Employment 4016618

Termination of Employment – Unfair dismissal As a result of the changes, the following types of employees cannot make an unfair dismissal claim: employees who have not completed the “qualifying period” of employment (extended from 3 months to 6 months) employees dismissed for “genuine operational reasons” or for reasons that include “genuine operational reasons”, eg, redundancy Employees employed by an employer with 100 employees or less seasonal workers

Unfair Dismissal – Changes to the Commission’s Powers Commission can determine extension of time and jurisdictional issues on the papers, that is, without a hearing Commission may dismiss (without a hearing) an unfair dismissal claim on the basis that it is “frivolous, vexatious or lacking in substance”

Unfair Dismissal – Changes to the Commission’s Powers (cont) An employer may apply for the dismissal of an unfair dismissal application on the basis that the employment was terminated for genuine operational reasons, or for reasons that include genuine operational reasons If an employer makes such an application, the Commission must hold a hearing to determine the employer’s application before dealing with the matter any further

Termination of Employment - Compensation In determining an amount that may be awarded to an employee, the Commission must have regard to: the amount of any income earned by the employee between the date of termination and any order made for reinstatement any misconduct of the employee that contributed to the employer’s decision to terminate the employee’s employment Compensation may not include a component representing compensation for shock, distress, or humiliation, or other analogous hurt, caused to the employee by the manner of dismissal

Record Keeping Requirements 4016618

Record keeping requirements Under the new regulations: there are comprehensive record keeping obligations for all employees; these cover; working hours, pay various forms of leave (including annual and personal leave), superannuation and termination of employment; recent exclusion announced for employees not entitled to overtime and earning over $55,000 (hours of work records only)

Conclusion 4016618

Conclusion – What Does AH & MRC Need to do? Assess your current position, that is, make sure you understand: the scope of your State and Federal Awards and Agreements when your Agreements expire what will and will not be enforceable under your Awards and Agreements what your various unions are likely to do or demand

Conclusion – Decide Future Direction Will you observe pre-existing Award and Agreement obligations that are no longer enforceable? Will you continue with past practices or are there opportunities to steer in a new direction? What changes do you wish to bring about?