Supplement for Creighton & Stewart s Labour Law Fifth Edition. August 2015

Transcription

1 Supplement for Creighton & Stewart s Labour Law Fifth Edition August 2015 About this Supplement This supplement is not intended to provide a comprehensive update of developments since the publication of the Fifth Edition in Besides correcting a few errors, it concentrates on legislative developments and proposals, though a few leading cases are included. Errata [6.29], [6.51]: These paragraphs should have made it clear that applications for judicial review against Fair Work Australia (now Fair Work Commission) decisions may be lodged either in the Federal Court or the High Court. Section 39B of the Judiciary Act 1903 (Cth) was amended in 2009 to permit such actions to be initiated in the Federal Court, rather than having to be made to the High Court and then remitted (although that option remains open). [13.96]: The section reference in the fourth last line should be to s 65(4), not s 65(5). [13.119] The section reference in the third last line should be to s 90(1), not s 90(2). [17.27]: The section reference at the end of the paragraph should read: (s 357(2)). [17.65]: The fourth last line should read: addition of protection against victimisation on grounds of non-membership, as well as membership [17.113]: The Listening Devices Act 1972 (SA), referred to in fn 290, should be the Listening and Surveillance Devices Act 1972 (SA). [20.29]: In fn 31, Queensland and Western Australia should be just Queensland. The list of legislation that follows should include the Conspiracy and Protection of Property Act 1900 (WA) s 5. Bibliography: The following entry was inadvertently omitted: Cooper J (chair) 2010, Super System Review: Final Report (Commonwealth of Australia, Canberra) The Fair Work Review and the 2012 and 2013 Amendments Fulfilling a commitment made when the Fair Work Act 2009 (Cth) (FW Act) was introduced, in late 2011 the Gillard Government commissioned an evidence based review of the legislation from a panel comprising economist John Edwards, academic Ron McCallum and retired judge Michael Moore. The panel s report, entitled Towards More Productive and Equitable Workplaces: An Evaluation of the Fair Work Legislation, was released in August 2012: see <

2 The review s principal finding was that the FW Act was operating broadly as intended. There was no evidence to support the widely expressed view by business leaders that the legislation was holding back productivity. Nor had there been any significant increase in industrial disputation. Consistent with this analysis, the report rejected proposals from employer groups for a return to voluntary bargaining, the reintroduction of statutory individual agreements, a relaxation of the better off overall test for agreement-making, or a narrowing of the transfer of business provisions. Nor did it accept that there should be any significant curtailment in the right of employees to complain of unfair dismissal or take industrial action, or the right of union officials to enter workplaces. While rejecting proposals for radical change, the panel did put forward 53 proposals for improving the Fair Work system, many involving amendments to the legislation. Some of these would address technical problems, or (in a few cases) either reverse or confirm contentious interpretations of the Act. For the most part, however, the panel emphasised the need to allow the newer aspects of the Fair Work regime to be fully tested, before rushing to intervene. In October 2012 the government announced that it would implement a limited number of recommendations for which it considered there was broad stakeholder support. These were duly passed in the form of the Fair Work Amendment Act 2012 (2012 Amendment Act), the majority of which was proclaimed to take effect from 1 January A second tranche of reforms was effected by the Fair Work Amendment Act 2013 (2013 Amendment Act), passed in June This Act also included further changes that had not been the subject of attention by the Review, such as the introduction of new provisions on workplace bullying and consultation over changes to working hours. The various changes made by the 2012 and 2013 amendments are considered further below. Strangely, Labor failed to adopt a position on many of the recommendations from its own Review before losing office at the September 2013 federal election. By contrast, the Abbott Government has sought to implement a number of the remaining proposals from the Review. The Coalition s Reform Proposals The Liberal/National Coalition was elected to office in September 2013 on the basis of a promise to make a number of limited (though still important) changes to the existing system of labour regulation, but with a commitment also to establish an inquiry to consider more substantial reforms for the future. The most significant of the Abbott Government s plans for reform were set out in a document entitled The Coalition s Policy to Improve the Fair Work Laws, released in May 2013 (see < This promised to maintain the Fair Work laws, pending a comprehensive and broad inquiry by the Productivity Commission (PC). Any changes that might flow from that inquiry would be taken to a new election. Before then, the only changes to be proposed to the Fair Work legislation would be those expressly set out in the policy. There was also a guarantee that the pay and conditions of workers will be protected. After a lengthy delay which attracted criticism from business groups, the promised review was formally initiated in late The government had apparently been putting it off as long as 2

3 possible, fearful of a possible public backlash against any suggestion of radical, Work Choices-style reforms. More is said about the PC review in the next section. In the meantime, the Fair Work Amendment Bill 2014 (2014 Amendment Bill), tabled in the House of Representatives on 27 February 2014, was introduced to implement many of the changes to the FW Act flagged in the Coalition s May 2013 policy. This and other measures, including the Fair Work Amendment (Bargaining Processes) Bill 2014, the Building and Construction Industry (Improving Productivity) Bill 2013 and the Fair Work (Registered Organisations) Amendment Bill 2014, are also detailed in later sections of this supplement. However, the Coalition has been significantly hampered by its lack of a majority in the Senate. It has been able to garner crossbench support for a few reforms, notably to the superannuation guarantee scheme. But other proposals have either been rejected by the upper house or, in most cases, not brought on for debate. For Bills in this last category, which include the 2014 Amendment Bill, it appears that the government is unwilling to risk defeat, or to attempt negotiations that might result in some form of compromise or partial acceptance of its preferred changes. A small business policy launched by the Coalition during its 2013 election campaign also spoke of supporting smaller employers in various ways, including by immunising them from penalties for inadvertently breaching workplace laws when following advice from the Fair Work Ombudsman (FWO). The policy commits the new government to supporting independent contractors and resisting what is described (though without coherent explanation) as Labor s co-ordinated attack on the self-employed. It is unclear what, if anything, has been done to implement this policy. A further inquiry initiated by the Abbott Government asked the Australian Law Reform Commission (ALRC) to look at federal laws that encroach upon traditional rights, freedoms and privileges, for example by reversing a burden of proof, denying procedural fairness, interfering with freedom of speech or association, excluding the privilege against self-incrimination, or authorising the commission of a tort. One of the areas of law singled out for attention was workplace relations. In August 2015 the ALRC released an interim report, which can be found (along with other details of the inquiry) at < The report canvasses a number of labour law issues, including the question of exempting religious institutions from employment discrimination laws and the extent to which freedom of association is or is not unduly restricted under the FW Act. But there are no recommendations or firm conclusions about any particular encroachments in this field. Productivity Commission Inquiry As noted above, the Abbott Government has asked the PC to conduct a review of the entire workplace relations framework : see < The terms of reference for the review suggest a strong focus on fostering competitiveness and reducing the compliance burden for employers. But in a series of issues papers released in January 2015, the PC emphasised that it would adopt a critical, evidence-based approach to proposals for reform and consider the social as well as the economic aspects of wellbeing. 3

4 On 4 August 2015, a lengthy and detailed draft report was released. A further period of consultation will follow, including public hearings in various cities and regional centres during September, before a final report is delivered to government by the end of November The draft report, which runs to nearly a thousand pages, speaks of a system that needs renovation, but not a knockdown and rebuild. To the disappointment of those pushing for more radical reforms, the PC is generally positive about the way the current framework seeks to balance the bargaining power of employers and workers, respect community norms about fair treatment and encourage employment. As it notes in seeking to dispel some of the myths commonly voiced by stakeholders, Australia s labour market performance and flexibility is relatively good by global standards, and many of the concerns that pervaded historical arrangements have now abated (Overview, p 3). Employment relations are described as being generally harmonious and productive, with any toxic situations often attributable to poor relationship management rather than flaws in the WR framework (pp 3, 5). At the same time, the draft report identifies certain deficiencies that need to be addressed. To that end, it recommends a number of changes, though much fewer in number than might have been expected. The most significant proposals concern the structure and membership of the Fair Work Commission (FWC), the reduction of Sunday penalty rates in certain industries, and the creation of a new enterprise contract option that would allow businesses to vary award terms for groups of employees. These and other key recommendations and observations are summarised throughout this supplement. Institutions By virtue of the 2012 Amendment Act, Fair Work Australia (FWA) (see [6.05]-[6.37]) was renamed as the Fair Work Commission (FWC), with effect from 1 January A further change was to subsume the FWC s Minimum Wage Panel (see [6.06]) within a new Expert Panel. Besides conducting annual wage reviews, this Panel is meant to help identify default superannuation funds for modern awards though for reasons explained later on, it has not to date been allowed to carry out that function. There must be six part-time Panel members in total, allowing for a different range of expertise according to whether the Panel is reviewing wages or selecting superannuation funds. In the PC s draft report on the workplace relations framework, three major changes to the FWC are proposed. One would be to create a separate Minimum Standards Division to deal with minimum wages and modern awards. This would be staffed by members primarily with expertise in economics, social science and commerce, not the law (Overview, p 12). A Tribunal Division would deal with other functions, principally those involving dispute resolution. But there would not, as some employer groups have urged, be a separate division or body to deal with appeals. Secondly, the principle of tenure for FWC members should be abandoned, with new appointees given five-year terms and even existing members subjected to regular performance reviews. Thirdly, to counter persistent claims about stacking and a tendency to bias in decision-making (something identified only in relation to unfair dismissal matters), there would be a new process for selecting members. The government could appoint only from a shortlist developed by an independent panel, which 4

5 would be specifically charged to identify candidates widely seen as credible and non-partisan in their likely approach to workplace relations matters. The Road Safety Remuneration Tribunal (RSRT) is a new federal tribunal for the road transport industry that contains a mix of dual-appointed FWC members and part-time industry members. It is empowered by the Road Safety Remuneration Act 2012 to make remuneration orders, approve collective agreements and deal with disputes over unsafe work practices, in relation to both employed and self-employed drivers. The only order made to date is the Road Transport and Distribution and Long Distance Operations Road Safety Remuneration Order This does not set minimum rates as such, but does require (among other things) that drivers be given written contracts and receive payment within 30 days. There are also requirements for safe driving plans, training, and drug and alcohol testing. In accordance with an election commitment, the Abbott Government has commissioned a review of the operation of the RSRT and the need for the legislation under which it operates. But although a report was received in April 2014, the government has not yet released it or announced a response. The Federal Magistrates Court (see [6.59]-[6.60]) has been renamed the Federal Circuit Court of Australia, with its magistrates becoming judges: see Federal Court of Australia Legislation Amendment Act Outworkers The Fair Work Amendment (Textile, Clothing and Footwear Industry) Act 2012 introduced new protections under the FW Act for workers in the clothing industry. In particular, certain outworkers are now deemed to be employees, a code of practice may be issued for their engagement, and they may recover payments from indirectly responsible entities that benefit from their work. The protections are similar to those that already existed under certain State laws (see [8.18]). Foreign Labour A review of the 2007 amendments to the Migration Act 1958 concerning the illegal employment of foreign workers (see [7.70]) concluded that they had been largely ineffective in curbing the growth in such arrangements. Accordingly, a new civil penalty regime, based on recommendations from the review, has been implemented: see the Migration Amendment (Reform of Employer Sanctions) Act Another Labor initiative, the Migration Amendment (Temporary Sponsored Visas) Act 2013, has imposed a greater burden on employers to demonstrate local skill shortages before being able to sponsor foreign workers under subclass 457 visas. It has also empowered FWO inspectors to play a greater role in monitoring compliance with sponsorship obligations. For its part, the Abbott Government has sought to free up the grant of temporary visas in various ways, including by expanding the number of skilled occupations that are officially listed as being in shortage. In March 2015 it announced plans, in the wake of a review of the 457 visa system, to streamline the processing of applications, provide greater flexibility in English language testing and the satisfaction of skills requirements and lower the level below which employers must pay a 5

6 market salary. A Ministerial Advisory Council on Skilled Migration will also be used to provide expert advice on areas of skill shortage. The government is not, however, seeking to modify or remove the labour market testing requirements introduced in A further promise is to crack down on the rorting of 457 visas, including by making it unlawful for a person to be paid to sponsor a visa. Affirmative Action and Equal Employment Opportunity In 2012, the Equal Opportunity for Women in the Workplace Act 1999 (see [7.74]) was amended by the Equal Opportunity for Women in the Workplace Amendment Act 2012 and retitled the Workplace Gender Equality Act Reports must still be filed by larger employers with what is now called the Workplace Gender Equality Agency (WGEA). But, commencing in 2014, the focus of that reporting has changed, from process to outcomes. Instead of simply declaring what programs it has instituted to eliminate discrimination against women, an employer must now report on how it is performing against a set of gender equality indicators. These include the gender composition of the employer s workforce and of its governing body (such as a board of directors); the extent to which men and women receive equal remuneration; and the availability and use of conditions or practices designed to support employees with family or caring responsibilities. The government may also prescribe minimum standards, which can be either general or industry-specific, and which may stipulate quantitative targets for particular indicators. The prescribed gender equality indicators are detailed in Schedule 1 of the Workplace Gender Equality (Matters in relation to Gender Equality Indicators) Amendment Instrument 2013 (No 1). For the reporting year that commenced on 1 April 2015, it is also necessary to cover the matters set out in Schedule 2. The expanded requirements were originally set to commence a year earlier, but were deferred pending a review: see Workplace Gender Equality (Matters in relation to Gender Equality Indicators) Amendment Instrument 2014 (No 1). The Abbott Government has completed a process of public consultation over the reporting requirements, eliciting predictable complaints from businesses about the burden they impose. But it remains to be seen whether the government proposes any changes for the future. The government has also issued a fairly basic set of minimum standards under the 2012 Act, which apply from 1 October 2014 to employers with 500 or more employees: see Workplace Gender Equality (Minimum Standards) Instrument There are no targets as such. Employers are simply required to have policies or strategies to support improvements in at least one of four gender equality indicators. National Employment Standards As recommended by the Fair Work Review, the 2013 Amendment Act has greatly expanded access to the right to request flexible work arrangements (see [13.94]-[13.97]) under the National Employment Standards (NES). Under the original s 65 of the FW Act, this was limited to employees who were parents of pre-school or disabled children, and not (for example) those caring for elderly relatives or adults with disabilities. A request may now be made by (among others) any employee who is a carer within the meaning of the Carer Recognition Act 2010 (Cth), who has a disability, who is over 55, or who has experienced family violence. 6

7 A further recommendation from the Fair Work Review was that employers should no longer be able to reject requests for flexibility without actually meeting the employee. This has been ignored, although a similar recommendation in relation to requests to extend unpaid parental leave (see [13.101]) has been picked up in the Coalition s 2014 Amendment Bill. Further changes to parental leave are dealt with later under a separate heading. The 2014 Amendment Bill also seeks to implement two further recommendations from the Fair Work Review as to NES entitlements. The first would clarify that any annual leave loading (or other addition to a base rate of pay) to which an employee is otherwise entitled is not payable on termination of employment, unless an applicable modern award or enterprise agreement expressly provides otherwise (see [13.119], and compare Centennial Northern Mining Services Pty Ltd v CFMEU [2015] FCAFC 100). The second is to amend s 130 of the FW Act (see [10.33]) so that an employee cannot take or accrue leave under the NES while absent from work and receiving workers compensation payments, regardless of what the relevant workers compensation law might otherwise provide. The Fair Work Review also recommended that the process of harmonising State and Territory long service laws (see [13.130]) should be expedited; and that consideration be given to limiting to 11 the number of public holidays for which penalty rates can become payable (see [13.126]). While the Coalition has indicated its support for the first of these recommendations, it is unclear what (if anything) has been done to progress that process. The second recommendation appears to have been ignored by the major parties. In its draft report of August 2015, the PC recommends retention of the National Employment Standards, which it notes have attracted little controversy. But it does propose that the capacity of State or Territory governments to impose additional public holidays be curtailed. It is also interested to explore the idea of allowing casuals to exchange part of their loading for specified entitlements they would not otherwise get, such as paid personal leave. Modern Awards Item 6 of Schedule 5 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 required an interim two-year review of the modern award system. Few major changes were agreed by the FWC during this process, though exceptions included: an increase in the minimum notice period for terminating an IFA (see below, Individual Flexibility Arrangements, which also discusses changes proposed by the 2014 Amendment Bill and the PC); an increase in wage rates for apprentices (see below, Minimum Wages); and the scrapping of junior rates for 20-year old retail workers (see National Retail Association v FWC [2014] FCAFC 118). Attempts by employer groups to reduce overtime or penalty rates were generally unsuccessful, although in Re Restaurant and Catering Association of Victoria [2014] FWCFB 1996 a Full Bench did agree to cut Sunday rates for some casual restaurant workers. A Federal Court challenge to this 7

8 decision was unsuccessful: see United Voice v Restaurant and Catering Association of Victoria [2014] FCAFC 121. Even before the interim review concluded, the first of the regular, four-yearly reviews of modern awards (see [11.88]) had been initiated. In 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [23] it was emphasised that while the new review would be broader in scope than its predecessor, anyone seeking a change would need to adduce probative evidence properly directed to demonstrating the facts supporting the proposed variation. Furthermore, the FWC would only depart from previous Full Bench decisions on the content of modern awards if cogent reasons were advanced (at [27]). The review, which is likely now to extend into 2016, is progressing in two parallel phases. One involves the resolution of a series of common issues that are considered to arise in relation to many awards. Matters already addressed under this heading include annual leave (see 4 Yearly Review of Modern Awards Annual Leave [2015] FWCFB 3406) and time off in lieu of overtime (see 4 Yearly Review of Modern Awards Common Issue Award Flexibility [2015] FWCFB 4466). Other issues yet to be dealt with include casual and part-time employment and public holidays, as well as a proposal from an employer group to create special provisions for micro-businesses (those with fewer than five employees). The FWC has also identified and sought to resolve a number of inconsistencies with the NES: see eg 4 Yearly Review of Modern Awards Alleged NES Inconsistencies [2015] FWCFB The other phase involves the review of individual awards, which have been divided into four groups. The last of these include awards for industries where penalty rates are likely to be a major issue. A notable feature of the review process has been an attempt to simplify awards and make them more user-friendly, especially for smaller employers. To that end, the FWC and the FWO have collaborated to formulate an exemplar version of the security industry award. Among other things, it provides tables of pay rates that incorporate loadings and penalty rates, rather than requiring users to undertake what are often complex calculations. One matter that the FWC will need to consider carefully during the four-yearly review is an addition to the modern awards objective (see [11.47]-[11.49]) made by the 2013 Amendment Act. Section 134(1)(da) of the FW Act now refers to the need to set additional remuneration for work that is overtime, on weekends or public holidays or shiftwork. It remains to be seen what effect, if any, this has on moves to reduce or eliminate penalty rates in certain awards. Before these reviews, a number of applications had been brought to vary the modern awards that took effect in January The most significant of these, in terms of the potential to set a precedent across a number of industries, involved an attempt to reduce the minimum period of engagement for casual employees set by the General Retail Industry Award A general application to that effect was rejected by FWA, on the basis that such a change was not necessary to achieve the modern awards objective: see Appeal by National Retail Association Ltd [2010] FWAFB However, a much more limited variation was subsequently granted, allowing students to work 90-minute shifts after school: see SDA v National Retail Association Ltd (No 2) (2012) 205 FCR 227. In another development, FWA decided to create the first modern enterprise award (see [11.26]- [11.33]), covering Telstra: see Telstra Corp Ltd v CEPU (2012) 223 IR 36. In doing so, it rejected 8

9 Telstra s application to terminate its existing enterprise instruments and fall back to the relevant industry awards. The Full Bench agreed with the unions view that if the history and circumstances of Telstra did not justify the making of an enterprise award, then nothing ever would. The Full Bench also noted that, unlike the case with previous unsuccessful applications (see eg Yum Restaurants Australia Pty Ltd v Full Bench of FWA (2011) 199 FCR 75), the Telstra awards generally set pay and conditions that were above the industry safety net, not below. After considerable negotiation, the agreed content of a new Telstra Award was approved in Telstra Corp Ltd v CEPU [2015] FWCFB 97. The FWC has since agreed to create a number of other modern enterprise awards, most notably for the Australian public service: see Commonwealth v CPSU [2015] FWCFB 616. Modern awards have also been amended to include a new requirement for employers to consult over changes to working hours, as discussed under a separate heading below. In its draft report on the workplace relations framework, the PC noted that awards do not generally appear to create adverse outcomes. The distortions they create in the labour market can be seen as beneficial since they address unequal bargaining power and reduce the transaction costs of forming employment contracts for small business (Overview, p 21). At the same time, however, existing awards are criticised for being inflexible, ambiguous and too often historical relics of the relative bargaining strength of past protagonists [rather] than a carefully thought out way of remunerating employees (Overview, p 21). Both in varying awards and in setting minimum wages, the FWC is encouraged to place less weight on precedent and make more of an effort to proactively undertake its own data collection and systematic high-quality empirical research as the key basis for its decisions (p 11). The PC does note the steps being taken as part of the current four-yearly review to make modern awards simpler and easier to understand. But it recommends that the concept of a regular review of all awards be abandoned, with further assessments to be undertaken only as needed. On the controversial subject of penalty rates, the PC strongly endorses the need for workers to be compensated for working overtime, at night or on rotating shifts. It also accepts the case for public holiday rates. But at least in the hospitality, entertainment, retail, restaurant and cafe industries, Sunday rates should be reduced to the same as those set for Saturdays, given changing patterns of consumption on weekends and evidence that the overall social costs of daytime work on Sundays are similar to Saturdays, and consistently lower than evening work (p 24). This change would desirably occur as part of the current four yearly review (p 25), though it would not affect employees in other industries. The PC has also invited feedback on whether there should be any greater capacity than at present for preferred hours clauses, which would permit employees to volunteer to work at times of their choosing without penalty rates. High Income Threshold The high income threshold for which s 333 of the FW Act provides has now risen, as of 1 July 2015, to $136,700. This affects the availability not just of high income guarantees (see [11.61]-[11.63]), but of unfair dismissal claims (see [19.40]-[19.43]), as well as the cap on compensation for unfair dismissal (see [19.76]). 9

10 Enterprise Agreements Labor s 2012 Amendment Act made two changes to the system of enterprise agreements under Part 2-4 of the FW Act. An agreement must cover at least two employees (s 172(6)), while it is also now unlawful to include any provision that allows an employee or employer to elect not to be covered by the agreement (s 194(ba)). In CFMEU v Queensland Bulk Handling Pty Ltd (2012) 224 IR 133 a Full Bench of FWA had previously held that such opt-out clauses were not consistent with the Act s concept of a collective agreement, though only after a series of inconsistent rulings on the point. The 2013 Amendment Act added a requirement that agreements include a term obliging employers to consult over changes to working hours, as discussed under a separate heading below. In accordance with the Coalition s May 2013 policy, the Fair Work Amendment (Bargaining Processes) Bill 2014 has proposed a new criterion for approval of agreements. The FWC would need to be satisfied that during bargaining for the agreement, improvements to productivity at the workplace were discussed. As the Bill stands, however, the FWC would not be required to consider whether the resulting agreement does in fact improve productivity. The 2014 Amendment Bill has also proposed important changes to the system for making greenfields agreements (see [12.28]-[12.29]). Echoing the Fair Work Review s concerns about the capacity of trade unions to frustrate the making of such agreements, the Bill would allow the FWC to issue bargaining orders to enforce good faith bargaining requirements. This is to be done by amending the Act to recognise that the union(s) with whom the employer chooses to negotiate, the employer and anyone it appoints to negotiate on its behalf are to be regarded as bargaining representatives. The Review also recommended that the FWC be empowered to resolve greenfields disputes by arbitration. This has not been adopted. Instead, the 2014 Amendment Bill would allow an employer to take unilateral action to have its preferred agreement approved by the FWC. This could be done after three months of unsuccessful negotiation with the relevant union(s), commencing from a date that must be formally notified in advance to those unions. Once that three-month period elapsed, there would be no scope for bargaining orders to be sought. Besides the usual approval criteria, the FWC would need to be satisfied that the employer s proposed agreement provided for pay and conditions that are consistent with the prevailing pay and conditions within the relevant industry for equivalent work. A note to be inserted into the Act suggests that the FWC may for this purpose have regard to prevailing pay and conditions in the relevant geographical area. In effect, the Bill would mark a partial return to the Work Choices regime, under which an employer could at any time choose to make an employer greenfields agreement rather than negotiating with a union. The difference this time is that an employer would at least need to attempt to negotiate a union deal and be exposed to the possibility of bargaining orders (at least before the end of the negotiation period) if it failed to do so in good faith. It should also be noted that if an employer chose to have a greenfields agreement approved in this fashion, the agreement would be taken to have been made by any unions that were bargaining 10

11 representatives, despite their lack of consent. That in turn means that the resulting agreement would cover those unions an important point in relation to rights of entry to any workplace covered by the agreement, as discussed below. In its draft report on the workplace relations framework, the PC has advocated a slightly different approach. Businesses unable to strike a union deal for a greenfields project after three months negotiation would be given two options. One choice would be to go ahead and register the employer s own preferred agreement. But this could have a nominal duration of no more than a year leaving the employer vulnerable after that time to a further round of bargaining and the taking of protected industrial action. The other option would be for the employer to agree to arbitration by the FWC on a last offer basis, a concept the 2012 review had also proposed. Rather than compromise between the parties, the FWC would have to choose between the employer s proposed agreement and that offered by the relevant union(s). An agreement made via this last route could have a nominal duration of up to five years, or even longer if the FWC could be persuaded of the need to extend that period (for example, in the case of a large construction project). The same would apply to greenfields agreements negotiated with unions. For all other enterprise agreements, the maximum duration of four years would revert to the five years set under Work Choices. Another recommendation from the PC is the reinstitution of a no-disadvantage test, in place of the better off overall test introduced by the FW Act. The benchmark for assessing the content of an agreement would continue to be the award conditions that would otherwise apply, though the FWC would be encouraged to avoid line-by-line comparisons and to focus on the position of classes of employee, rather than individual workers. The PC also suggests that the FWC be empowered to ignore procedural defects, such as problems with a representation notice, if satisfied that no employees had been adversely affected. To make bargaining more efficient, it is further recommended that non-union delegates could only act as bargaining representatives if acting for at least 5 per cent of the employees to be covered by a proposed agreement. A further point on enterprise agreements concerns the effect of s 45E of the Competition and Consumer Act 2010, formerly known as the Trade Practices Act 1974 (see [22.114]). In Australian Industry Group v FWA (2012) 205 FCR 339, it was held that the making of an enterprise agreement that seeks to restrict the terms on which work is contracted out by an employer cannot of itself breach s 45E. This is because a statutory agreement between an employer and its employees is not a type of arrangement comprehended by the section. However, a review of competition policy instigated by the Abbott Government (see < has called for this to change. In a report issued in March 2015, the review panel accepted that, as a general principle, collective bargaining over the wages and working conditions of employees should continue to be exempt from the operation of competition laws. But it also expressed the view that businesses should generally be free to supply and acquire goods and services, including contract labour if they choose (p 394). It recommended that both s 45E and a related provision, s 45EA, be amended to apply to both awards and industrial agreements, except to the extent they relate to the remuneration, conditions of employment, hours of work or working conditions of employees. The ACCC would also be given the 11

12 right to appear before the FWC to make submissions concerning compliance with the amended provisions, for example when the tribunal was considering whether to approve an enterprise agreement. For its part, the PC agrees that it should not be possible to use enterprise agreements to regulate the use of contractors or labour hire. But in other respects it has resisted calls for an expanded list of prohibited content or for greater constraints on pattern bargaining. It also sees little merit in the Abbott Government s idea (see above) of requiring parties to discuss (much less achieve) productivity improvements as a condition for an agreement to be approved. Finally, the decision in UFUA v Country Fire Authority [2015] FCAFC 1 should be noted. This concerned, among other things, the implied constitutional limitation on federal regulation of the composition of a State government s workforce (see [4.40]). It was held that this limitation does not generally apply to agreed restrictions, so that a Victorian government agency could not repudiate commitments on staffing levels contained in an enterprise agreement. The new Labor government in Victoria has, in any event, announced that it will seek to amend the Fair Work (Commonwealth Powers) Act 2009 (Vic) to remove any doubt as to the validity of existing agreements. Further changes made or proposed to the regulation of bargaining for an enterprise agreement are dealt with below under the heading of Collective Bargaining. Individual Flexibility Arrangements As noted in [12.51], unions have been effectively negating the use of individual flexibility arrangements (IFAs) under many enterprise agreements, by insisting on negotiating flexibility terms that are narrow in scope. To prevent this, and as recommended by the Fair Work Review, the Abbott Government s 2014 Amendment Bill proposes that agreements should, as a minimum, permit individual employees to negotiate arrangements as to the following matters (if dealt with in the agreement): the times at which work can be performed, overtime or penalty rates, allowances and leave loadings. These are the matters currently stipulated by the model flexibility term in Schedule 2.2 of the Fair Work Regulations 2009, as well as by the standard flexibility term in awards. The Bill also proposes to amend the FW Act s provisions regarding flexibility terms in modern awards (see [11.64]-[11.68]) and enterprise agreements (see [12.48]-[12.51]) in accordance with other Fair Work Review recommendations. The changes would include lengthening the maximum notice needed to terminate an IFA from 28 days to 90 days. This change had indeed already been agreed to by the FWC for flexibility terms in modern awards: see Modern Awards Review 2012 Award Flexibility (2013) 232 IR 159. The Bill would also make it clear that the better off overall test can be satisfied by providing non-monetary benefits in lieu of monetary entitlements; and allow an employer to defend an action for breaching a flexibility term, by showing that it followed the required procedures and reasonably believed that the requirements for a valid IFA were satisfied. However, there will be no new requirement on employers to report details of any individual flexibility arrangement (IFA) to the FWO, as the Review had also proposed. Importantly, the Bill proposes to retain existing safeguards on the use of IFAs. Any IFA must leave each affected employee better off than they would have been under the relevant award or agreement. Indeed, the Bill proposes to add a requirement that each IFA contain a statement by the 12

13 employee explaining why the arrangements meets their genuine needs and leaves them better off. And an employer cannot insist on a job-seeker signing an IFA as a condition of being employed, or exert undue pressure or influence on an existing employee to enter into an IFA. The PC notes in its August 2015 draft report that it is surprising that employees and employers have not used individual flexibility arrangements more frequently, as they offer considerable flexibility, provide protections for employees, and are not hard to make (Overview, p 35). To remedy this, it is proposed that their availability be advertised more widely, and that the FWO provide greater guidance as to their permissible content as well as conducting random audits to ensure that safeguards against their misuse are not being ignored. It also proposes to increase the notice period for termination to a year. Enterprise Contracts In terms of creating greater flexibility for businesses, the more interesting proposal from the PC and indeed arguably the most novel element in its entire report is the creation of a new instrument, to be called an enterprise contract. This is intended to span the gap between IFAs, which (if genuinely customised to the needs of individuals) may involve high transaction costs, and formal enterprise agreements, the procedural requirements for which tend to deter many small or medium-sized businesses. The enterprise contract is described as being in effect a collective IFA, but with extra flexibility (p 37). It would vary the terms of an award for a class or group of employees within an enterprise, though again subject to a no-disadvantage test. Businesses would be encouraged (though not required) use template terms pre-approved by the FWC, so as to have confidence that their arrangements were lawful. It could be used even for workers covered by an enterprise agreement. The contract would need to be lodged with the FWC, but could take effect prior to any checking, and there would be no collective vote of employees to approve it. Existing employees could choose either to accept it or stay on their current terms. New employees, by contrast, could be required to agree to it as a condition of their employment. All employees would have the right to opt out of an enterprise contract after a minimum period (possibly 12 months), or after the contract reached its expiry date. Contracts found on complaint not to meet the statutory requirements could be varied by the FWO, though it is unclear what (if any) penalty would be imposed on the employer. The PC s ideas about these new instruments are plainly still tentative: hence the lack of any formal recommendations and the acceptance that the desirability, practicalities and detailed design of an enterprise contract needs [sic] to be tested further (p 39). Executive Pay In relation to executive pay (see [13.05]), the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 took effect in July It imposes new rules for the determination and control of remuneration packages for the key management personnel of listed companies. 13

14 Minimum Wages Part 2-6 of the FW Act provides for annual adjustments to the minimum wages set for national system employees (see [13.09]-[13.21]). In its Annual Wage Review (2011) 203 IR 119, FWA s Minimum Wage Panel granted a 3.4 per cent increase in minimum wages, including those set by modern awards. The following year, it decided on a 2.9 per cent increase: see Annual Wage Review (2012) 222 IR 369. In its Annual Wage Review [2013] FWCFB 4000, the Panel granted a 2.6 per cent increase. This was followed by a 3 per cent increase in the Annual Wage Review [2014] FWCFB 3500, from what is now known as the FWC s Expert Panel, and a 2.5 per cent increase in the Annual Wage Review [2015] FWCFB As from July 2015, the national minimum wage is $ per week or $17.29 per hour. In each of these cases, the Panel has reiterated its view that modest and regular increases in minimum wages have a small or even zero impact on employment (ibid at [435]). In 2011 the Panel also, for the first time, established minimum rates for award-free juniors and trainees. In both cases, it opted to apply the special rates set for those types of worker by the Miscellaneous Award The Panel had originally intended to conduct a broader review in of junior and trainee wage rates in awards, but this was postponed: see Annual Wage Review Juniors and Trainees [2011] FWA 619. In 2013, as part of the interim two-year review of the modern award system, a Full Bench of the FWC granted significant increases to minimum wage rates for apprentices, including by enshrining the principle of higher rates for adult apprentices (those aged 21 or over): see Modern Awards Review 2012 Apprentices, Trainees and Juniors (2013) 236 IR 1. In addition, and as expected (see [13.21]), the Panel has progressively increased the casual loading for award-free employees, so that from July 2014 it now sits at 25 per cent, the same figure as in modern awards. In Western Australia, the Industrial Relations Commission has increased the State minimum wage (see [13.22]) to $ per week or $17.89 per hour: see State Wage Order [2015] WAIRC In reviewing the setting of minimum wages in its August 2015 draft report, the PC rejects the view that existing levels are highly prejudicial to employment (Overview, p 3) and notes that modest increases of the type awarded in recent years can be seen as beneficial in various ways. At the same time, it advocates the need for the FWC to take a conservative approach at a time when the economy is weak and youth unemployment levels have risen. It also, without making any specific recommendations, expresses interest in the idea of the government using wage subsidies or tax credits as a more targeted way of protecting the low-paid, especially when workers on minimum wages can often be found in higher income households. For employees under 21, the PC canvasses a switch from setting rates based on age to using competency or years of experience. A systematic review of wages for trainees and apprentices is recommended. Feedback is also sought on any problems associated with the growth and regulation of unpaid internships, which had previously been the subject of research undertaken for the FWO (see A Stewart and R Owens, Experience or Exploitation? The Nature, Prevalence and Regulation of Unpaid Work Experience, Internships and Trial Periods in Australia, FWO, Melbourne, 2013). 14

15 Pay Equity Under Part 2-7 of the FW Act, FWA can make an order to ensure equal remuneration for men and women workers for work of equal or comparable value : see [13.30]-[13.33]. The first such order was made in a case brought by the ASU in respect of the female-dominated social and community services (SACS) sector. In a preliminary ruling, the Full Bench was satisfied that gender had been important in creating the gap between pay in the SACS industry and pay in comparable state and local government employment : Equal Remuneration Case (2011) 208 IR 345 at [291]. It refused, however, to articulate any equal remuneration principle to guide future decisions. In February 2012, a majority of the Bench accepted a joint ASU-Commonwealth submission that this gap should be remedied by increases of between 19 and 41 per cent to the minimum wage rates set by the Social, Community, Home Care and Disability Services Industry Award 2010: see Equal Remuneration Case (2012) 208 IR 446. The Award itself was not varied, with the equal remuneration order instead left to operate on a standalone basis. A special 4 per cent loading was also granted, to recognise impediments to bargaining in the industry. Both the increases and the loading are being phased in over an eight-year period that commenced in December 2012: see Equal Remuneration Case (2012) 223 IR 410. In the wake of this ruling, applications have been made for equal remuneration orders in relation to certain workers in the childcare sector. The Full Bench hearing the case has sought submissions on various issues concerning the legislative and conceptual framework for the proceeding, which effectively go to the general approach the tribunal should take in dealing with claims under Part 2-7. The Full Bench is expected to hand down a preliminary decision on these issues before dealing with the applications themselves. To what extent the tribunal takes the opportunity to depart from the approach adopted in the SACS case remains to be seen. Superannuation In Roy Morgan Research Pty Ltd v Commissioner of Taxation [2011] HCA 35 the High Court rejected a challenge to the constitutional validity of the superannuation guarantee (SG) legislation (see [13.66]- [13.69]), holding that it was validly enacted pursuant to the taxation power in s 51(2) of the Constitution (see [4.27]). Labor s promised increase to SG contributions (see [13.66]) was legislated by the Superannuation Guarantee (Administration) Amendment Act 2012, which took effect in July It provided for minimum contributions by employers to rise in progressive increments, from 9 per cent of ordinary time earnings to 12 per cent, with the latter figure to apply from July The same measure removed the previous exemption for employees aged over 70. On coming to office, the Abbott Government endeavoured to delay the planned increases in employer contributions. Its initial attempts to do this were blocked in the Senate, so that the rate increased to 9.5 per cent from 1 July 2014, as originally scheduled. However, the government was eventually able to secure support for amendments to hold that rate for seven years: see Minerals Resource Rent Tax Repeal and Other Measures Act 2014 Sch 6. As s 19(2) of the Superannuation 15