Understanding the new fair work act

With the Fair Work Act now heading towards full operation, it is important that employers clearly understand the various requirements of the Act and the implications for their organisations.

With the Fair Work Act now heading towards full operation, it is important that employers clearly understand the various requirements of the Act and the implications for their organisations.

The first part of the Act, which was introduced in July 2009, covers the move to collective agreements with the abolition of individual agreements.

In January 2010, the Modern Award Regime will be introduced together with the new National Employment Standards (NES).

This means that in January 2010, the 4,000 plus Federal and State awards that operate in Australia will be replaced with about 150 modern awards.

The two modern awards that have most relevance for workplaces in the manufacturing industry are the Manufacturing and Associated Industries and Occupations Award 2010, and the Clerks – Private Sector Award 2010.

The big change is that modern awards have a flexibility clause, which allows the employee and the employer to agree to vary the conditions of the award, subject to a no disadvantage test.

Areas that can be agreed upon to be changed are arrangements for when work is performed, overtime rates, penalty rates, allowances, and leave loading.

National Employment Standards

There are 10 new standards that apply to every employee without exception:

1. Maximum weekly hours of work.

2. Requests for flexible working hours have to be considered.

3. Parental leave and related entitlements.

4. Annual leave.

5. Personal/carers leave and compassionate leave.

6. Community service leave (i.e. Jury service).

7. Long service leave.

8. Public holidays.

9. Notice of termination and redundancy pay.

10. Giving employees the Fair Work Information Statement.

While much of this is already in place in current legislation, the new right to request flexible hours has the potential to land managers in conflict with Fair Work Australia (the replacement for the Australian Industrial Relations Commission) if it is not handled properly.

Collective Agreements

The move to collective agreements as the only enterprise level agreement option is accompanied by specific rules about who is entitled to bargain for these collective agreements.

Bargaining representatives are:

1. An employer who would be covered by the agreement.

2. Any union that has a member that would be covered by the agreement (unless the member has specified in writing that he or she does not wish to be represented by the union).

3. Any union that has applied for a low paid authorisation that relates to the agreement.

4. Any person specified in writing as their bargaining representative by either an employer of employee who would be covered by the agreement.

Point two means that in practice a collective agreement will ultimately be made with a union. You can decline to be involved in bargaining for a collective agreement, but once you have started bargaining, the bargaining period is deemed to have commenced and the various bargaining rules, including the requirement to bargain in good faith, kick in.

If you decline to bargain and a union is involved, they then need to get a “Majority Support Determination” from Fair Work Australia, which will grant this if satisfied that over 50 percent of the workforce wants to bargain for a collective agreement. In the Cochlear case recently determined it was ruled that this would be established by a postal ballot carried out by the Electoral Commission.

In the new regime, an employer has three options to govern terms and conditions of employment:

1. Establish Collective Agreements.

2. Use standard Common Law contracts with each individual to agree to terms and conditions of employment.

3. Employ people under a modern award.

Common Law contracts must have conditions at least equal to the conditions of the modern award that applies, and they must also incorporate the terms of the NES.

If you haven’t done so already, you need to start thinking about your options now, particularly if your company has made use of Australian Workplace Agreements.

As always, the best industrial relations strategy is to treat your workforce properly and fairly, and rely on the good relationships you have built up through good employment practices.