A Crystal Ball on the Federal Government's Workplace Reforms

by Will Ward

As with most areas of law the devil is in the detail, and workplace relations is no different. While any detailed analysis awaits the Federal Government producing its legislation, it nonetheless has made its intentions with regard to workplace relations known. As John Howard outlined to parliament on 26 May 2005, the changes his government intends to implement include the following:
  • Exempting companies with up to 100 employees from unfair dismissals;

  • Increasing probation periods for new employees from three to six months;

  • Reducing the items awards can contain from 20 to 16 (removing long service leave, notice of termination, jury service, and superannuation as these items are already dealt with by legislation);
  • Removing from the Australian Industrial Relations Commission ("AIRC") the ability to set minimum wage rates and vet enterprise agreements;

  • The creation of a new Fair Pay Commission to set minimum wage rates;

  • Requiring unions to hold secret ballots before engaging in strike action;

  • Increased penalties for unions engaging in prohibited strike action • Certified agreements ("CAs") to be approved by the Office of Employment Advocate ("OEA") and not the AIRC.
While clearly aimed to advantage employers, the impact that these proposed changes will likely have for employees will depend greatly on their positions in the workforce. Employees who have strong unions to negotiate enterprise agreements for them will likely be able to maintain or achieve reasonably good employment conditions.

Similarly, employees who possess highly marketable skills should be able to maintain good employment conditions. However, with less job security resulting from the changes to unfair dismissal laws, employees will need to be more careful when being promoted or changing jobs by making sure that any new employment contracts contains appropriate termination provisions.

For employees with less marketable skills their employment conditions may languish as the new Fair Pay Commission appears to be designed to increase minimum wages at a slower rate than the AIRC. Furthermore, the minimum employment conditions that the Fair Pay Commission will set will be the comparator for applying the no disadvantage test, for future CAs and AWAs, based on the new minimum wages and the new statutory conditions of annual leave, personal leave, parental leave and a maximum number of ordinary working hours. This will likely lower the required minimum level of conditions in registered workplace agreements, compared to the current standards.

The espoused benefits of the proposed changes include that it will create a national system of industrial relations and provide employers with increased flexibility. However, if the States do not agree to hand over their industrial relations powers, workplace relations law will still be a patchwork of both State and Federal law as the proposed changes will likely rely on the Corporations power in the Australian Constitution, and many businesses are not constitutional corporations. Moreover, the High Court could still knock back some of the changes as being beyond the scope of the Corporations power in the Australian Constitution.

Even if the changes are implemented it is still unlikely to be all clear sailing for employers. While there will be a reduction in unfair dismissal claims, we will probably see an increase in unlawful terminations claims, wrongful termination claims, victimisation claims and discrimination claims in other courts. These claims are much more protracted and costly.


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