(Un)fair work act - Review Panel says it is 'fair'

The Report of the Fair Work Act Review Panel contained no surprises. The Panel largely found that the Fair Work Act 2009 (Cth) is 'fair' and balances the interests of employers and employees. The Panel's recommendations mainly seek to fine-tune the Act. Although the Report identified issues with aspects of the Act, the Panel decided not to make recommendations in some key areas such as good faith bargaining and enterprise agreements. There are no significant recommendations or game changers.  See our summary of recommendations of the Report.

Summary of aspects of report

The Review Panel Report, released by Minister, Bill Shorten in June 2012, was a culmination of several months of consultation and over 250 written submissions. 

1. The Report's 53 recommendations broadly include:
2. changes to clarify the operation of the Fair Work Act and some decisions made under it;
3. creation of a consistent national standard eg a national long service leave scheme; 
4. minor changes to leave and other National Employment Standards;
5. changes to unfair dismissal procedures and adverse action claims; and
6. changes to individual flexibility agreements and greenfields agreements.
    

National Long Service Leave Scheme

The Report recommends that the national long service leave standard be introduced by 1 January 2015. This long awaited change assists national employers who currently administer different long service leave standards across various States. 

Safety net changes

The Report recommends some minor changes to the National Employment Standards, including:

1. Annual leave - no accrual while an employee is absent from work on workers' compensation and no payment for annual leave loading on termination of employment, unless provided in an award or enterprise agreement.
2. Right to request flexible working arrangements - extending the right to request flexible working arrangements to carers of frail, aged and other non-child dependants and requiring that a meeting be held to discuss a request that has not been agreed.
3. Unpaid parental leave - changes regarding requests for extended unpaid parental leave and providing that special maternity leave does not impact on unpaid parental leave entitlements.
4. Public holidays - limiting payment of penalty rates to 11 public holidays.
    

Adverse action

The Report recommends that the test for adverse action be based on the subjective intention of the decision maker. The Panel, in effect, adopted the approach taken in the dissenting judgment of Justice Lander in the Barclay case. Recently, the High Court overturned the Full Federal Court decision in Barclay, and broadly adopted the approach recommended by the Review Panel. 

Sham contracting arrangements

The Report recommends tightening the defence to the prohibition on misrepresenting an employment contract as a contract for services. To rely on the defence, an employer would need to show they had a reasonable belief that the contract was one for services and they could not have been expected to know that it was in fact a contract of employment. 

Procedural changes and unfair dismissals

The Report recommends changes to unfair dismissal hearings and procedures. The time for filing an unfair dismissal application is recommended to change from 14 to 21 days, and the time for filing a general protections claim involving dismissal to be reduced to 21 days from the current 60 days.

No new individual workplace agreements

The Panel rejected proposals for statutory individual agreements, and instead recommended changes to individual flexibility agreements (IFA's).  These changes include:

• introducing a model flexibility term;
• increasing the notice period for termination from 28 days to 90 days;
• clarifying that the better off overall test includes non monetary benefits provided monetary benefit foregone is relatively insignificant and proportionate to the benefit;
• prohibiting a prospective employer making an employment offer conditional on entering into an IFA. 

However, restricting the matters that are the subject of an IFA has been a significant factor limiting their use and the Report's recommendations are unlikely to make IFA's a more attractive option for employers.

Enterprise agreements

Despite significant debate and submissions about the content of enterprise agreements, the Panel considered there was no need to change the current agreement content rules. The Panel found that the rules strike an appropriate balance between the rights of employers and employees. However, the Report did recommend that opt-out clauses in enterprise agreements be abolished. This has been an area of conflicting decisions, and this recommendation raises some concerns for employers.

No significant changes to good faith bargaining

A number of submissions were made to the Panel about good faith bargaining and significant issues were identified by the Panel. These issues included:

• direct communications with employers;
• timing of ballots;
• changes at the workplace during bargaining;
• changing position on previously agreed matters and surface bargaining.

The Report indicated that the law in this area was developing and it was 'precipitous' to recommend any significant changes. The Panel noted that the current principles appeared to be operating effectively, and are flexible and responsive to bargaining circumstances. It is significant that the Panel has decided not to make changes in this area as this is one of the areas where extensive submissions were made.

Protected Action Ballot orders available after bargaining has commenced

The Report recommends that protected action ballot orders be available after bargaining has commenced. This is a significant recommendation that seeks to address the decision in the JJ Richards case where the Full Federal Court ruled that bargaining should only start after a majority support for bargaining had been established. 

No arbitration (except greenfields agreements)

The Panel noted that good faith bargaining provisions have not yet been fully tested, and therefore declined to recommend any additional avenues for arbitration, except for greenfields agreements. The Report makes recommendations, however, to address issues relating to the approval of greenfields agreements. These recommendations include that:

• good faith bargaining requirements apply to negotiation of a greenfields agreement;
• employers take all reasonable steps to notify eligible unions of an intention to negotiate a greenfields agreement; and
• Fair Work Australia be given power to conduct limited arbitration where negotiations reach an impasse after certain time periods. 

While these recommendations go some way toward addressing risks to investment as identified by the Panel, they are unlikely to resolve some key issues being dealt with on major projects.

Other

The Report recommends that the name of Fair Work Australia be changed to include the word "Commission" and that it no longer contain the words "Fair Work". The role of Fair Work Australia should also be extended to include the "active encouragement of more productive workplaces". The Panel considered that the Fair Work Act did not need amending to implement this recommendation. The Report is currently the subject of consultation by the Minister for Workplace Relations.