Fair Work Act 2009

On 1 July 2010, the new bargaining arrangements under the Act became operational.[18] Contrary to the individual arrangements that were dominant under the previous Coalition WorkChoices legislation, the new regulations put a stronger emphasis on enterprise based bargaining with the removal of individual Australian Workplace Agreements.[18] The Act continues to outlaw pattern bargaining[18] and removes the distinction between union and non-union agreements.[18]

Under the legislation there are three types of enterprise agreement.[19] First, a single-enterprise agreement made between an employer and the employees whom the agreement will cover.[20] Second, a multi-enterprise agreement made between two or more employers, covering the employees of those employers.[21] Third is a 'greeenfields' agreement between an employer and trade union, made in relation to a new business which has not commenced operations.[22]

The most common type of enterprise agreement is the single-enterprise type, and the principal requirement for such an agreement to be approved by the Fair Work Commission is that it passes what is known as the "Better Off Overall Test" (BOOT). This test involves the Fair Work Commission assessing a proposed agreement and ensuring it provides conditions more favourable than current legal minimum entitlements.

Prior to the Act, the equivalent of BOOT was the 'No disadvantage test' of its predecessor, WorkChoices. The language of the BOOT is somewhat different to the 'no disadvantage test', which previously allowed the passing of a collective agreement provided such agreement would not result in conditions less favourable to the entitlements otherwise applicable. Naughton and Pittard note the different language and requirements of the BOOT suggest it 'can be interpreted quite differently from the [no disadvantage test]' raising the bar higher to ensure workers are actually better off, rather than merely not facing a reduction in entitlements.[23]

There is continuing debate about the practicality and question of whether the BOOT ought continue in its current form. Then Industrial Relations Minister Christian Porter in 2020 introduced legislation designed to reform the BOOT. If passed, the legislation would allow the Fair Work Commission discretion to approve an agreement that places workers on conditions less favourable than they otherwise would be entitled.[24] Trade unions and the Australian Labor Party argued such changes would result in cuts to workers pay and opposed the changes.[25]

Good-faith bargaining, in which each party "makes a sincere effort" in negotiations, is at the core of the Act.[26] The Act sets out what is meant by good-faith bargaining: attending, and participating in, meetings at reasonable times; disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner; responding to proposals made by other bargaining representatives for the agreement in a timely manner; giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative's responses to those proposals; refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining, and recognising and bargaining with the other bargaining representatives for the agreement.[27]

Parties may seek bargaining orders from the Fair Work Commission if they believe the other party has failed to comply with these good-faith bargaining obligations.[26] Good-faith bargaining does not require a bargaining representative to make concessions during bargaining for the agreement, nor does it require a bargaining representative to reach agreement on the terms that are to be included in the agreement.

According to the Act, if one or more of the bargaining parties does not meet the good-faith requirements, the concerned party should first provide the party allegedly not bargaining in good faith with a written notice setting out those concerns to the relevant bargaining representatives, and a reasonable time within which to respond to those concerns.[28] However, Section 229 of the Act states it may not be necessary to comply with the notice requirements should the Fair Work Commission be 'satisfied that it is appropriate in all the circumstances to do so'.[28]

If the party does not respond appropriately to the written notice, the Fair Work Commission can make a bargaining order.[29] Should the relevant party continue to ignore the good-faith requirements following this order, the Fair Work Commission can issue a serious breach declaration.[30]

If the bargaining representatives have not settled the issue of non-compliance by the end of the post-declaration negotiating period (generally 21 days), the Fair Work Commission can issue a bargaining related workplace determination.[31]

The Act stipulates that employers must take all reasonable steps to notify employees of their right to a bargaining agent not later than 14 days after the notification time of the agreement. The notification time is the time when the employer agrees to bargain or initiates bargaining when the FWC determines that there is majority support among employees for collective bargaining, or when a scope order (an FWC-issued order to resolve questions about the employees covered by an agreement) comes into operation. The notice must specify that the employee may appoint a bargaining representative to represent the employee in bargaining for the agreement and a matter before FWC that relates to bargaining for the agreement. An employee organisation cannot be a bargaining representative of an employee unless the organisation is entitled to represent the industrial interests of the employee. A person may revoke their bargaining agent in writing. Bargaining agents are described in Division 3 of the Fair Work Act 2009, and can be the employer, a person the employer appoints in writing, the employee, or a person an employee appoints in writing.[32]

If the employee is a member of an employee organisation that is entitled to represent the industrial interests of the employee and the employee does not appoint another person as their bargaining representative, the organisation will be the bargaining representative of the employee. Instruments for appointing a bargaining representative are also set out in Division 3. An appointment of a bargaining representative comes into force on the day specified in the instrument of appointment. The employer must be given the instrument of appointment of the bargaining agent. For an appointment made by an employer, a copy of the bargaining instrument must be given, on request, to a bargaining representative of an employee who will be covered by the agreement.

Mandatory terms in an enterprise agreement are set out in Division 5 of the Act. Agreements must include a flexibility term, that is, a mechanism for allowing variations in the agreement to meet needs of individual employees while still preserving basic entitlements and protections. They must include the obligation for the employer to consult with covered employees about major workplace changes that are likely to have a significant effect on the employees and allow for the representation of those employees for that consultation. The agreed-on base rate of pay cannot be below that set by the relevant modern award.

There are ten minimum conditions covered under the National Employment Standards:

This standard provides that employers must not request or require an employee to work more than 38 hours for full-time employees or the ordinary hours of work for a part-time employee.[33]

This standard allows for employees to request a change to their working arrangements where such change relates to any of the circumstances listed in the Act, which includes caring for children or family, disability, age, or family violence.[34][35]

Parents who complete 12 months service with an employer become entitled to take a period of 12 months of unpaid parental leave without pay from their employer.

Australian employees receive 20 days of paid annual leave per year, which is said to be generous compared to many countries.[36]

10 days of personal leave per year is provided, with this for use when an employee is unfit for work due to illness or family emergency.

This entitlement allows employees to take unpaid community service leave for activities such as voluntary emergency management activities or jury duty.[37]

An employee gets long service leave after a long period of working for the same employer, and this entitlement varies from state to state.[38]

This entitles employees to be absent from work on a day that is a public holiday in their base state of work.[39]

This provision ensures that employees are provided with a fair period of termination notice, and redundancy pay depending on years of service.

Standardised documents on the rights of employees which must be given to any new employee on commencement.

Not all commentators agree the Rudd government struck the right balance between simplification and appropriate protection. Baird and Williamson, for example, argue that the new minimum standards are detrimental to certain groups, particularly women because the new awards fail to adequately cover women working in social services, call centres and the health sector.[40] Former vice-president of the Fair Work Commission Graeme Watson has criticised the National Employment Standards, stating it alongside minimum wages and penalty rates 'needed review'. [41]

The Act created modern awards, which are documents setting out the minimum terms and conditions of employment in addition to the National Employment Standards. Modern awards came into effect on 1 January 2010, and apply to all employers covered by the Act.[42]

When I first learned that Australia uses an awards system to determine wages, I had the same kind of reaction that early settlers must have had on seeing the platypus or emu — utter disbelief. Markets are supposed to set wages, not judges on industrial tribunal court proceedings

— Richard B. Freeman

The above quote[43] from a distinguished labour economist captures the unique nature of the Australian awards system, which prior to the Act, amounted to a form of compulsory arbitration by a public tribunal. The Act amended the award system significantly, with the modern award system operating under Part 2-3 now very different from the one first drawing the attention of comparativists like Freeman.[44] Under the old award arbitration system, an award's contents was dictated and constrained by a need or desire for change. The Act no longer leaves such matters for employers or unions to limit award contents and changes through claims, but rather allows for the Fair Work Commission to decide what matters it will or will not consider for inclusion.[44]

Currently, the modern award system the Act established remains controversial and complex, with Alistair Cox, chief executive officer of Hays stating "in Australia, you have got maybe the most complex, arcane set of labour laws and payment schemes in the world".[6]

The Act specifically prohibits employers from taking what is known as 'adverse action' against an employee because of a protected reason.

Adverse actions can include:[45]

• Dismissal of an employee
• Not giving an employee their legal entitlements
• Changing an employee's job to their disadvantage
• Differential treatment of an employee
• Refusing to hire an employee
• Offering an employee different and unfair working conditions, compared to other employees

Employers must not take adverse action action against an employee because of:

• Engagement in industrial activity (Such as strike action, or campaigning for better conditions)
• Temporary absence from work due to illness or accident
• Discriminatory reasons (Including age, disability, race, or sex)[46]
• Exercising a workplace right (Such as asking for an unpaid entitlement)[47]

Under the provisions provided in the general protection provisions, a claim of adverse action based on a protected reason must show a direct and substantial link. It is not sufficient merely to claim adverse action on the basis of possessing a protected characteristic and then facing adverse action. In Philip v State of NSW, an individual applied for a position in the New South Wales police force, and during interviews had been recorded in file notes as having limited English skills, an accent, and was difficult to understand.[48] It was also noted this individual was agitated during the interviews. The individuals refusal of employment was found not to constitute a breach of the general protections provision as the decision was not exclusively based on a lack of English, but also an 'abrasive' attitude.[48]

The Act marked a substantive change in the nature of bargaining arrangements within the Australian industrial relations system. Bargaining will be based collectively at the enterprise level, in contrast to the emphasis on individual agreements, which was encouraged under the Howard government's WorkChoices. At the heart of the new legislation is the principle of 'good-faith bargaining', which outlines the necessary behaviours of bargaining parties in negotiations.