The federal government’s Fair Work legislation will be able to commence on 1 July 2009, as planned, after two key transitional Bills were passed by parliament. The government has also released Regulations that provide important details as to the new system, and introduced a further measure relating to the building industry.  

The Rudd Government had always intended the bulk of its Fair Work Act 2009 (FW Act) to commence on 1 July 2009. That can now happen, after two key measures were passed by Parliament on 17 June.  

The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TPCA Act) formally repeals the Workplace Relations Act 1996 (WR Act), and deals with the many issues that arise in transitioning to the new Fair Work regime.  

As for the Fair Work (State Referral and Consequential and Other Amendments) Act 2009 (State Referral Act), it makes consequential amendments to various federal laws. It also amends the FW Act to allow it to have an extended application in Victoria, and in any other State that may subsequently refer powers to the Commonwealth.  

On 19 June, the government also released the Fair Work Regulations 2009 (FW Regulations).  

Although there are still further regulations to come (including under the TPCA Act), the FW Regulations reveal a number of important details. These include the “high income threshold”, which affects both unfair dismissal claims and the application of awards. The Regulations also specify record-keeping obligations for national system employers.  

More is said below about the two new Acts, the FW Regulations, and also another measure just introduced into parliament, the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009.  

TPCA Act  

In an earlier issue of Employment Matters, we outlined the transitional arrangements proposed in the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009.  

Among other things, this legislation deals with the status of “old” awards and agreements, the transition to the modern award system, and various issues relating to the National Employment Standards that will apply from 1 January 2010.  

During the Bill’s passage through Parliament, a large number of amendments were made. One was to give effect to a deal struck between the government and Family First to secure the passage of the FW Act.  

Under Schedule 12A of what is now the TPCA Act, the ordinary definition of “small business employer” in the FW Act will not apply for the first 18 months of the new unfair dismissal system. Instead, there is a complex formula to work out whether a business has 15 full-time equivalent employees at the time of a dismissal.  

The new definition affects both the minimum employment period before an employee can bring an unfair dismissal claim, and the application of the Small Business Fair Dismissal Code. It will cease to have effect from 1 January 2011.  

Other significant changes made to the legislation include:

  • clarifying that Fair Work Australia (FWA) can make a representation order where there is merely a “threatened, impending or probable” dispute about union coverage at a workplace
  • allowing a union that has gone • through the process of having industrial action authorised by a protected action ballot before 1 July to take action after that date, but only in limited circumstances
  • allowing an application for the modernisation of an enterprise award to be made before 2010.  

State Referral Act

The new FW Act applies to “national system employees”, a term generally defined to cover those who work for trading, financial or foreign corporations, Commonwealth agencies, and employers that operate in a Territory.

As a result of amendments made by the State Referral Act, that definition can now cover employees working for any other type of employer in a “referral State”, to the extent specified in legislation passed by that State.  

It is up to each State to choose whether it wants to refer powers to the Commonwealth, so as to trigger the operation of this extended definition, and if so which workers are to be covered by the federal system.  

To date only Victoria has passed the necessary legislation. The Fair Work (Commonwealth Powers) Act 2009 (Vic) ensures that from 1 July 2009 the FW Act will apply to all employees in Victoria, with the exception of certain judicial officers or senior public servants.  

A number of other States have indicated that they too are prepared to help the Rudd Government achieve its goal of a single system of regulation, at least for the private sector.  

In each case, however, referral legislation still needs to be drafted and passed. Hence the FW Act will not have an extended application in these States until 1 January 2010 at the earliest.  

The current state of play is as follows:

  • South Australia has announced it will refer powers to the Commonwealth over private sector employers who are not constitutional corporations, but will keep its own system for the State public sector and local councils.
  • Tasmania has also announced it will refer powers, and will keep a State system for its public sector (but not for local councils, who will be covered by the federal system).
  • Queensland has expressed a willingness in principle to refer powers, but apparently for the private sector only. Western Australia• will not be referring any powers, but has instead announced a review of its State system.  
  • New South Wales is the only State so far not to indicate a position.  

To facilitate transitional arrangements in referral States, the State Referral Act makes certain amendments to the TPCA Act.  

These deal in particular with the status of awards (including public sector awards) that cover employees that are only subject to the federal system by reason of State references of power.  

For the time being, these provisions only apply in Victoria. But they also provide a framework for what will happen in other referral States, as and when they join the national system.  

Fair Work Regulations  

The FW Regulations deal with various matters of detail. One of the more important is to provide a formula for calculating the “high income threshold”.  

This earnings figure determines whether award/agreement free employees are capped out of making an unfair dismissal claim.  

It is also the figure above which employees can effectively contract out of any awards that would otherwise cover them, by accepting a formal guarantee as to their earnings.  

Although no figure is provided in the Regulations themselves, an explanatory statement indicates that for the year beginning 1 July 2009, the high income threshold will be $108,300.  

In calculating an employee’s annual earnings in relation to the unfair dismissal cap, the Regulations allow FWA to count any non-monetary benefit for which the parties have not agreed a value, but which FWA is satisfied can be given a real or notional value. This is in addition to the other types of earnings already specified in the FW Act.  

The FW Regulations also set out the requirements for the keeping of records and the content of pay slips, as from 1 July.  

It will be important for all national system employers to check the details of the new rules, which can be found in Division 3 of Part 3-6 of the Regulations. But in broad terms, they are similar to those that currently apply under the WR Act.  

Other matters dealt with in the FW Regulations include:  

  • clarification of the extent to which • State and Territory laws on training or child labour can apply to national system employers
  • how employees should be notified of • their representational rights when an employer commences negotiations for an enterprise agreement
  • the “model” (default) terms for • enterprise agreements in relation to individual flexibility, consultation and dispute resolution  
  • a detailed schedule of costs for • lawyers and other representatives, limiting the amounts that may be awarded (in those rare cases where a costs order is made) for certain items in relation to dismissal or “general protections” proceedings in FWA  
  • a method for calculating a • proportionate deduction from the pay of an employee who imposes a partial work ban by way of protected industrial action  
  • provision for Fair Work inspectors • to issue “infringement notices” as an alternative to court proceedings for certain types of non-compliance.  

Building and Construction Industry Bill  

The Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009 proposes to amend the Building and Construction Industry Improvement Act 2005 and rename it as the Fair Work (Building Industry) Act 2009.

The Bill would remove the different rules that apply to bargaining and industrial action in the building industry, but retain special powers and procedures for the enforcement of workplace laws in that sector.  

Those powers would be the responsibility of a specialist division within the office of the Fair Work Ombudsman, which would (from 2010) replace the existing Australian Building and Construction Commission.  

The Building and Construction Industry Bill is expected to go to a Senate inquiry, which will not report for some time. Further details will be provided in a future issue of Employment Matters.