03 Aug 2012

Review Panel: Fair Work Act needs change, gives employers, unions and the Tribunal some wins

The Australian Government has released the review of the Fair Work Act, "Towards more productive and equitable workplaces: An evaluation of the Fair Work legislation". The Government is currently considering the contents of the Panel's report.

The report makes 53 recommendations. Many of the recommendations relate to somewhat technical drafting issues but the following recommendations will have a material impact on employers and in some cases will have a significant impact on current practice. The majority of recommendations are for changes to the Fair Work Act (Act).

Adverse action

Most significantly the Panel has recommended that the Barclay Full Federal Court decision be overturned, so that the central consideration about the reason for adverse action is the subjective intention of the person taking the alleged adverse action.

Bargaining and agreement making

The Panel has recommended:

  • an expansion of powers for Fair Work Australia so that it can intervene on its own motion where it considers that conciliation could assist in resolving a bargaining dispute, including in respect of a greenfields agreement;
  • that enterprise agreement flexibility terms must deal with all matters listed in the existing model flexibility term, along with any additional matters agreed by the parties. This may reduce the capacity of unions to bargain away the benefit of IFA clauses in enterprise agreements;
  • that the good faith bargaining obligations also apply to negotiation of greenfields agreements;
  • that, when negotiations for a greenfields agreement have deadlocked, and a specified time period has expired and Fair Work Australia conciliation has failed, Fair Work Australia may, on its own motion or on application by a party, conduct "last offer" arbitration to determine the content of the greenfields agreement. This is a significant proposal that would limit the capacity of unions to stall major projects;
  • prohibiting enterprise agreement clauses which permit employees to opt out of the agreement.

The National Employment Standards

The Panel has recommended that:

  • existing Fair Work Australia decisions be overturned by providing that employees do not accrue annual leave while absent from work and in receipt of workers' compensation payments;
  • when an employee requests an extension of unpaid parental leave or requests flexible working arrangements to act as a carer, the employer be required to have a meeting with the employee to discuss the request if the employer has not agreed to the request. This would have a significant impact on most employers;
  • annual leave loading not be paid on termination of employment unless a modern award or enterprise agreement expressly provides for this.

Industrial action

The Panel recommended that the outcome of the Full Federal Court decision in JJ Richards be overturned so that the Act expressly provide that an application for a protected action ballot order can only be made when bargaining for an agreement has commenced. But in other respects the Panel has recommended very few changes to the industrial action provisions in the Act. The most significant change is that the power of the Minister to terminate protected industrial action (which has never been used) be repealed.

Right of entry

The Panel has made some significant recommendations in relation to the rules about right of entry of union officials, most notably

  • Fair Work Australia should have greater power to resolve disputes about the frequency of visits to an employer's premises by a union official; and
  • Fair Work Australia should have greater power to resolve disputes about the location of interviews union officials have with employees at a workplace.

Unfair dismissal

While most of the changes relating to unfair dismissal are technical, the Panel has recommended that Fair Work Australia be able to deal with unfair dismissal applications in a much more informal way through a hearing process that is "informal, inquisitorial and determinative". However, details of how this will be done are to be determined by Government.

The Panel also appeared to make a recommendation (based on a National Tertiary Education Union submission) that if accepted will result in employees whose fixed term contracts have expired to be taken to have been "dismissed" and able to bring an unfair dismissal application if a substantial purpose of employing on a fixed term contract was to avoid unfair dismissal. This would significantly impact on employers who utilise fixed term contracts and may require clear evidence as to why a fixed term contract was being used.

Changes to the Tribunal

The most significant recommendation is that the name of Fair Work Australia be changed so that the new title contains the word "Commission" and no longer contains the words "Fair Work".

Next steps

It is not known at this time whether the Government will adopt all or merely some of the recommendations. Once more is known, further updates will be provided.

Clayton Utz also intends to conduct briefings at each of our offices on the Panel's reported recommendations.

Related Knowledge

Related Knowledge

  1. Analysis: Fair Work Review

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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.