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20 Mar 2009

Further Fair Work Bill introduced

The Federal Industrial Relations Minister, Julia Gillard, has introduced the Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009 ("Transition Bill"). The purpose of the Transition Bill is to provide a mechanism for the transition to the new "Fair Work Australia" industrial relations system.

The Transition Bill repeals the current Workplace Relations Act 1996 ("WRA") other than Schedule 1 (which deals with registered organisations) and Schedule 10 (which deals with transitional registered associations) with the remainder to be renamed the Fair Work (Registered Organisations) Act 2009.

It confirms the timeline for the introduction of the new system as set out in the Fair Work Bill 2008, with the commencement of most of the Bill from 1 July 2009, including general protections, unfair dismissal, right of entry and stand down frameworks. From 1 January 2010 the provisions relating to the National Employment Standards (NES) and modern awards will commence.

Instruments, awards and the NES

The Transition Bill provides that from 1 January 2010, the minimum conditions of employment in the NES (set out in the Fair Work Bill) and the minimum rate of pay contained in a modern award, will prevail over existing workplace instruments made before 1 July 2009, and be applicable to all employees. These agreements, along with Individual Transitional Employment Agreements (ITEAs) made before 31 December 2009, will be known as "transitional instruments".

Under the Bill, transitional instruments will be dealt with in the following ways:

  • agreements (including Australian Workplace Agreements (AWAs) and collective agreements) will continue to operate past their nominal expiry date until terminated in accordance with the current rules for termination, or until replaced by a new enterprise agreement made under the new bargaining framework;
  • Fair Work Australia will be empowered to vary transitional instruments to resolve ambiguity or uncertainty (including in relation to the interaction of the instrument with the NES)
  • award-based instruments (such as unmodernised awards, notional agreements preserving state awards and pay scales) will cease once they are replaced by modern awards;
  • parties to enterprise awards and notional agreements preserving State awards derived from State enterprise awards will be able to apply to FWA to have their enterprise award modernised and integrated into the modern award system; and
  • the Australian Fair Pay and Conditions Standard, including pay scales and minimum wage guarantees and other minimum entitlements (eg. notice of termination and public holidays) will continue until the NES and modern awards commence on 1 January 2010.

Institutions

The Transitional Bill makes consequential amendments to other Commonwealth legislation in order to give effect to the creation of the Fair Work Divisions of the Federal Court of Australia and the Federal Magistrates Court of Australia, as provided by the Fair Work Bill.

From 1 July 2009, the functions of the Workplace Ombudsman and Workplace Authority will be taken over by the Fair Work Ombudsman.

The current agencies under the WRA will cease to exist at the following times:

  • the Australian Fair Pay Commission on 31 July 2009;
  • the Workplace Authority on 31 January 2010; and
  • the Australian Industrial Relations Commission and the Australian Industrial Registry on 31 December 2009.

"Take home pay orders" bolster safety net

Under the Transitional Bill, Fair Work Australia will be empowered to make "take-home pay orders" for individuals or groups of workers when their pay has been reduced as a result of moving onto modern awards. According to the Bill's Explanatory Memorandum, the power to make such orders is "tightly constrained" and can only be made when the has been an actual reduction in take-home pay and award modernisation must be the "operative or immediate reason" for the reduction in pay.

Bargaining and agreements

The Transition Bill sets out a framework for bargaining, agreement making and industrial action during and after the bridging period between 1 July 2009 and 1 January 2010. During that period agreements lodged for approval will be vetted against the no disadvantage test, not the "better off overall test". After 1 July 2009, bargaining under the WRA provisions will no longer be allowed, and a new bargaining process under the Fair Work Bill will have to be commenced.

Further Bill

The Minister has stated that a further transitional bill would be introduced in the week beginning 25 May 2009. It would deal with consequential amendments to more than 70 pieces of federal legislation and any amendments flowing from referrals of industrial relations powers by the States that had been completed by that time.

Implications for employers

Before 1 July 2009, employers should review the agreements in place with their employees (either individual or collective), and instruments applying to their employees to check their status under the Transitional Bill as of 1 July 2009 and 1 January 2010. Advice should be sought where there is any uncertainty.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.