The Productivity Commission recently delivered a draft report into workplace relations in Australia. While the Commission is still calling for submissions and intends to finalise its recommendations by November 2015, the Commission has made some recommendations that signal some good news for employers.

NES to be more flexible and simplified

The Commission recommends improvements to the National Employment Standards by:

  • including a provision in all awards allowing employees to observe public holidays on a date other than the prescribed gazetted dates;
  • not requiring employers to pay for leave or any additional penalty rates for any new designated state or territory public holidays; and
  • creating one uniform long service leave entitlement in order to simplify the current state based systems.

Penalty rate reductions

It also endorsed reducing onerous Sunday penalty rates in awards covering the hospitality, entertainment, retail, restaurant and café industries by bring them in line with Saturday rates, which are usually time and a half rather than double time.

Making unfair dismissal fairer for employers

The report further recommended removing the Fair Work Commission’s power to order compensation or reinstatement in unfair dismissals arising from mere procedural errors.

Additionally it suggests:

  • requiring the Fair Work Commission to undertake an upfront review of unfair dismissal applications so that the merits of all applications can be assessed before progressing to costly conciliations and hearings;
  • fees will be increased to an amount, which is dependent upon the employee’s income;
  • varying lodgement fees depending upon whether the matter progresses to conciliation or arbitration;
  • removing the emphasis on reinstatement as the primary remedy in an unfair dismissal proceeding; and
  • the Small Business Dismissal Code be removed, because the code does not protect employer’s against unfair dismissal claims and the advice provided by the code is not clear and/ or concise.

General protections

The Commission recommends introducing further limitations on the rights of employees and others to bring general protections claims under the Fair Work Act 2009, including:

  • further clarification in relation to how the exercise of a workplace right applies in instances where the ‘complaint or inquiry’ is indirectly related to the employee’s employment;
  • introducing measures to minimise the costs involved in general protections litigation by ensuring the litigation process is proportional to the issues at hand; and
  • a cap being placed on the damages that can be awarded by the Fair Work Commission or by the Federal Circuit Court.

Enterprise agreements

Enterprise bargaining and employment arrangements between employees and employers are the focus of the report. The Commission favours a shift from the ‘Better off Overall’ test to the ‘No Disadvantage’ test, which will give employers further flexibility to negotiate the terms of agreements.

The Commission recommended the introduction of measures in negotiations for greenfield agreements that would allow employers to choose from the following options if agreement cannot be reached after three months:

  1. continue to negotiate with the union;
  2. request the Fair Work Commission to undertake ‘last offer’ arbitration of an outcome by choosing last offers between the employer and union; and
  3. submit the employer’s proposed greenfield agreement for approval by the Fair Work Commission without any need for union agreement with a 12 month nominal expiry date.

This approach would assist employers locked in protracted negotiations although the greenfield agreement would still need to meet the ‘No Disadvantage’ test.

Enterprise contracts

The report recommends the introduction of an enterprise contract to permit employers to vary an award for an entire class of employees or for a group of particular employees without having to negotiate with each party individually or to form an enterprise agreement.

This proposal can be compared to a collective individual flexibility arrangement but importantly would also allow employers to offer an enterprise contract to prospective employees as a condition of employment. The enterprise contract would be accompanied by a number of safeguards including the following:

  • Existing employees would be able to choose whether to sign on or stay on their existing employment contracts.
  • The enterprise contract would be lodged with the Fair Work Commission but would not require approval.
  • The employer would be required to provide this arrangement in writing to its employees.
  • Employees could exit the arrangement after one year and return to the award or any other agreed contract.
  • The enterprise contract would have an expiry date.