Summary

The House of Representatives recently accepted extensive changes to the Fair Work Amendment Bill 2014 forced by Senate cross benchers.

The Act, which is a significantly watered down version of the Bill originally introduced by the Coalition early last year, amends the Fair Work Act 2009 (Cth) (FW Act) in the following areas:

  • greenfields agreements;
  • protected action ballot orders;
  • extending unpaid parental leave; and
  • a requirement for the Fair Work Ombudsman (FWO) to pay interest on unclaimed monies.

In this eBulletin, we take a look at the changes and what they will mean for employers.

In many respects, the Bill's convoluted parliamentary journey in responding to a number of outstanding recommendations from the "Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation review into the operation of the Fair Work Act", completed in June 2012 by the Fair Work Review Panel (the Report), typifies the slow pace of workplace regulatory reform in Australia.

The journey

The Bill was originally introduced to the House of Representatives in early 2014, amending the FW Act to implement elements of the Coalition’s policy to improve the Fair Work laws.

Specifically, the Bill sought to make a number of amendments to the FW Act, including around:

  • Right of entry
  • Annual Leave on termination and leave accruals while on workers compensation
  • Flexibility terms and arrangements
  • Unfair dismissal applications
  • Interest paid on monies claimed
  • Unpaid parental leave
  • Protected action ballot orders
  • Greenfields agreements

However, during the Bill's passage from the Coalition-controlled House of Representatives to the Senate, extensive changes to the Bill were forced by a number of independent and minor party Senate members. Those changes mean that from the list above, only the following survived:

  • A new process for single-enterprise greenfields agreements: people negotiating greenfields agreements are now included in the definition of "bargaining representative" and must therefore bargain in good faith, and the Fair Work Commission can now intervene to break a bargaining dead lock after six months (instead of three months as originally sought by the Government).
  • Protected action ballot orders: an application for a protected action ballot order cannot be made unless bargaining has commenced.
  • Extending unpaid parental leave: an employer must not refuse a request for extended unpaid parental leave unless the employer has given the employee a reasonable opportunity to discuss the request.
  • Interest paid on monies claimed: this allows for the Fair Work Ombudsman to pay interest on unclaimed monies subsequently claimed by former employees.

Impact of the proposed changes

While the amendments to the provisions relating to unpaid parental leave and the requirement that the FWO pay interest on monies subsequently claimed by employees are fairly uncontroversial, the changes to protected action ballots and the negotiation of single-enterprise greenfields agreements are arguably more substantive and are likely to carry greater significance for many employers.

Protected Action Ballot Order

The change to the FW Act's protected action ballot order regime means that an application for a protected action ballot order (PABO) to take protected industrial action can only occur once there has been a "notification time" in relation to the proposed enterprise agreement.

This effectively means that an application for a PABO cannot be made unless bargaining has commenced.

Greenfields Agreements

The Act now:

  • extends good faith bargaining to the negotiation of these agreements;
  • provides an optional six month negotiation timeframe for the parties to reach agreement. If agreement cannot be reached in that time with any relevant employee organisation on the terms of the proposed agreement, an employer will be able to apply to the Fair Work Commission for approval of its agreement; and
  • introduces a new requirement that the agreement must provide "for pay and conditions that are consistent with the prevailing pay and conditions within the relevant industry for equivalent work" - ie be consistent with prevailing industry standards. This is in addition to maintaining the existing FW Act approval tests.

Key lessons for employers

The main effects of the changes to the FW Act are likely to be felt by employers negotiating enterprise agreements and greenfields agreements in particular.

While many employers may consider the Bill a missed opportunity for reform in key areas, such as right of entry and the ability of employees (at least in New South Wales) to accrue annual leave during periods away on workers compensation, they may yet "get what they need".

On 3 December 2015, the Government introduced a new Bill, the Fair Work Amendment (Remaining 2014 Measures) Bill 2015, containing the elements removed from the previous Bill, such as obligations to pay annual leave benefits on termination, leave accruals while absent receiving workers compensation benefits, restricting union rights of entry and tightening up transfer of business rules. No doubt employers will be watching with interest to see whether this latest attempt at reform fares any better with parliamentary crossbenchers than its predecessor.