10 Nov 2010

The Fair Work Act - National Employment Standards

The Fair Work Act establishes a safety net, the National Employment Standards, for all national system employees. Hedy Cray explains why - and how - smart employers should be getting ready for them now.

The Fair Work Act - National Employment Standards
Hedy Cray, Partner, Workplace Relations

The Fair Work Act has established a safety net of 10 minimum entitlements for all national system employees, even the high-paid ones.

These National Employment Standards, or NES for short, don't come into effect until 1 January 2010, but smart employers should be getting ready for them now.

So what do these National Employment Standards actually look like?

The NES amend and add to some of the old Workplace Relations Act minimum entitlements in the Australian Fair Pay and Conditions Standard.

The 10 entitlements under the NES cover things like the maximum hours of ordinary work, leave and public holidays, notice requirements for termination, redundancy pay, and the right to ask for flexible working arrangements.

Quite a few of these have been around for a while and have only been slightly changed in the Fair Work Act, like annual leave and personal leave.

Some of these, however, do introduce some new rules that you have to understand.

The first is the right to request flexible working arrangements.

The NES codifies the right for parents and carers to request flexible working arrangements until their child reaches school age, or 18 years of age where the child is disabled. Employees can make the request if they have at least 12 months' continuous service, or are long-term casuals.

Essentially an employer may refuse a request on reasonable business grounds but has obligations to respond to requests in a particular way.

That's why it's important to set up a formal process to deal with these requests. This might also include creating some tools, like a checklist on how to respond to a request properly.

Another new NES that will have a big impact on is the right to redundancy pay. For the first time ever, eligible employees will have a statutory entitlement to redundancy if their employment is terminated either:

  • at the employer's initiative, because the employer no longer required the job done by the employee to be done by anyone (except where this is due to the "ordinary and customary turnover of labour"); or
  • because of the insolvency of the employer.

There are two important qualifications to this.

First, if there's a transmission of business, and the employee rejects an offer of substantially similar employment with recognition of continuous service by the new employer, then the employee is automatically excluded.

Secondly, Fair Work Australia can order the original employer to pay redundancy pay if it is satisfied that the provision operated unfairly to the employee.

So these are just two of the main features of the new NES.

What now? 
First, you need to review your current individual and collective agreements, employment contracts, and employment policies, to make sure they comply with the NES.

And remember, if you are currently negotiating for a new agreement, you still need to keep them in mind.

Finally, from a risk management point of view, we strongly recommend that you train all IR and HR managers and relevant supervisors in the new laws.

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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.