The New Transitional Act
You are here:In this article, we review Labor's recently introduced 'transitional' industrial relations legislation. It is transitional because this is not the end of the changes to our workplace relations laws...
The Changes - for the record
We have created this summary below of the major changes introduced by the Transitional Act for posterity purposes (and just in case you had managed to miss it all so far). We have sourced a lot of it from the Workplace Authority site at http://www.workplaceauthority.gov.au/.
Changes to the workplace relations system came into effect recently with the commencement of the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008, operative Friday 28 March 2008.
These amendments begin the transition to a new workplace relations system under Labor's Forward with Fairness election commitments. Further changes have already been foreshadowed with most of them to commence actual implementation from 1 January 2010.
The key changes introduced recently include -
- no new Australian Workplace Agreements (AWAs) can be made after the introduction date (there are special provisions allowing lodgement of some agreements reached with employees before the Act started);
- employers who were using AWAs as at 1 December 2007 can instead offer Individual Transitional Employment Agreements (ITEAs) to new employees until 1/1/2010 and existing employees already on AWAs;
- a new "no disadvantage test" for new collective agreements and ITEAs;
- enabling the Australian Industrial Relations Commission (AIRC) to commence the process of "award modernisation" whereby our existing hot-potch of Federal awards and preserved State awards ('NAPSAs') will be simplified and 'modernised'; and
- removes the requirement for employers to provide the Workplace Relations Fact Sheet to their employees as was required under the former Howard Government's industrial relations laws.
Need to know more detail? Give us a call on 1300 55 66 37 (or 02 8907 3888 in Sydney).
Some Peculiarities already emerging...
We are sure that a whole host of intricacies and permutations will emerge as time goes by. The new Labor Government has grafted changes on the complexities already inherent in the Work Choices legislation, which itself was subject to a number of amendments, including some quick fixes the Libs had to make, and also the more major Fairness Test changes.
If we have learned anything, complexity spawns complexity. We would really prefer they started all over again and rewrote the lot, but lets stop dreaming about the future and talk about some of the things we have here and now.
We'll continue to add to the list below in future newsletters as oddities of the system come to notice.
The 'New' No Disadvantage Test ('NDT' in the jargon)
The test for collective agreements under the 'old' Fairness Test introduced in May 2007 required that the Workplace Authority Director be "satisfied that, on balance, the collective agreement provides fair compensation, in its overall effect on the employees whose employment is subject to the collective agreement, in lieu of the exclusion or modification of protected award conditions that apply to some or all of those employees".
So a number of matters traditionally regulated by awards weren't subject to the test, for example, casual loadings and annual leave entitlements. These last 2 items were however subject to the Fair Pay and Conditions Standard, which were the same for all employees.
However, the new NDT is similar to the wording pre-Work Choices, in that it will be applied on a per employee basis and against the whole award or other "reference instrument", such as an old State award (now called a 'NAPSA' - a Notional Agreement Preserving a State Award), so that no employee can individually be disadvantaged.
The new wording is that a collective agreement passses the NDT if -
- "the Workplace Authority Director is satisfied that the agreement does not result, or would not result, on balance, in a reduction in the overall terms and conditions of employment of the employees whose employment is subject to the agreement under any reference instrument relating to one or more of the employees."
We are aware of some awards with casual loadings as high as 50%, and many others where casual employees enjoyed an entitlement to annual leave, despite receiving a casual loading. Presumably any workplace agreement will now have to include compensation for removing these provisions if present in the award (or reference instrument).
Comment - It seems a shame to us that the uneven impact of some awards can't be overcome by use of a workplace agreement, where employees overall are no worse off (that is, as a group as opposed to each individual). This will tend to create a ratchet-up effect that we might find will be inflationary on a national basis, particularly after the proposed right to bargain collectively is introduced in 2010 (see next page for more details on this proposal).
The 'Right' to Bargain Collectively
In previous articles, we have explained Labor's plans for 10 National Employment Standards ('NES'), similar in nature to the Howard Government's Australian Fair Pay and Conditions Standards under Work Choices, but obviously a bit more extensive.
Other proposed changes to the Workplace Relations laws include introducing a right for employees - and their unions - to bargain collectively with employers. The parties must then bargain in good faith. This change will be included in the draft 'substantive' legislation, as Labor has named it, and will be released for comment and consultation later this year. The legislation is expected to become law on 1 January 2010, along with the NES standards.
How These Provisions Might Impact Business
This is an extract from Forward with Fairness, Labor's plan for fairer and more productive Australian workplaces -
"Labor’s system will respect democracy in the workplace.
While most employers and employees in Australia voluntarily and successfully bargain collectively, there are times where a majority of employees at a workplace want to collectively bargain and this choice is not respected by their employer.
In these circumstances Labor will allow Fair Work Australia to determine the level of support for collective bargaining amongst employees in a workplace.
Fair Work Australia will have discretion about how it does so, for example using evidence of union membership, petitions or a secret ballot of employees.
Under Labor, if a majority of employees at a workplace want to bargain collectively, their employer will be required to bargain collectively with them in good faith.
Labor’s fairer system
Labor’s new industrial relations system will ensure collective bargaining and collective agreements are fair.
At the commencement of bargaining, employers will be obliged to inform the employees to be covered by the agreement of their right to choose to be represented in bargaining.
Employees and employers will be free to choose who represents them in collective bargaining. Employees who are union members will be able to be represented by a union that is eligible to represent them. All bargaining participants must respect that choice and bargain in good faith with all other bargaining participants."
These provisions are similar to US union representation provisions that enable a union to negotiate employment conditions of the employees it represents where a majority of employees confer this power on the union. It is a key objective for unions to seek to win this right of representation, in order to be able to effectively seek to unionise the workplace.
Whilst a right to bargain does not impose a right on an employer to reach agreement with the union, the duty of good faith bargaining imposes an obligation on the employer to negotiate. In the face of a concerted union bargaining campaign and associated 'communication' strategies, this becomes a powerful additional tool for a union to be able to unionise the workforce.
Comment - ER Strategies has negotiated workplace agreements on behalf of client employers with a variety of unions over the years. During negotiations, our experience is that employers often find themselves on the end of what they perceive to be 'unfair' union communication strategies, where the union portrays the employer as unsympathetic to employee needs or that the employer is somehow seeking to deny their fundamental rights as employees and unionists.
Once such suppposed 'right' is to have disputes arbitrated by an outside party, or 'the independent umpire'. Whilst this has a ring of sense and reasonableness about it, the benefit of experience has shown us that providing a right for a union to impose a mandatory arbitration of a dispute can seriously impact on an employer's ability to manage their business in the longer term. This can be particularly the case where the employer needs to introduce fundamental changes - sometimes in order to save a failing business - which some employees disaffected may object to.
The fact that few countries in the world provide for compulsory arbitration can be a difficult technical point to explain to staff, particularly when the union is asserting it as a fundamental human right. This then becomes a rallying point for the union to seek to sign up employees as members, to protect from the 'removal' of the fundamental right.
Our advice? Don't wait until the middle of an industrial negotiation to start to try and win the hearts and minds of your staff. Effective ongoing communication to build employee trust and engagement when relationships aren't under pressure is the smarter option, one of those important but not immediately urgent priorities. Oh, and don't agree to comnpulsory arbitration, unless you are happy to have someone from outside your business review managerial decisions and ultimately impose their own if they don't agree with them.
What do you think? Want to share your point of view? Use the comment function below to post a comment about this article.
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