The new Industrial Relations Bill – unpacked

Posted on December 10, 2020

On Tuesday 9th December 2020 the Morrison government tabled their new industrial relations bill in the senate.

Prior to this, on 26 May 2020, the Prime Minister the Hon. Scott Morrison MP announced the Australian Government’s JobMaker plan. Part of this plan was to explore reforms to the industrial relations (IR) system to regrow jobs lost in the COVID-19 pandemic.

Since June, the Attorney-General and Minister for Industrial Relations, Christian Porter, has led the IR reform working group process bringing together employers, industry groups, employee representatives and government to chart a practical reform agenda. Five working groups were established to discuss potential solutions to key issues within Australia’s industrial relations system.

The five working groups:

  1. The Casuals and fixed-term employees working group.
  2. The Award Simplification working group
  3. The Enterprise Agreements working group
  4. The Compliance and Enforcement working group
  5. The Greenfields Agreements working group.

 

The Industrial Relations Bill

According to the government, The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 supports the government’s commitment to Australia’s jobs and economic recovery, by:

  • providing certainty to businesses and employees about casual employment;
  • giving regular casual employees a statutory pathway to ongoing employment by including a casual conversion entitlement in the National Employment Standards (NES) of the Fair Work Act;
  • extending two temporary JobKeeper flexibilities to businesses, in identified industries significantly impacted by the pandemic;
  • giving employers the confidence to offer part-time employment and additional hours to employees, promoting flexibility and efficiency;
  • streamlining and improving the enterprise agreement making and approval process to encourage participation in collective bargaining;
  • ensuring industrial instruments do not transfer where an employee transfers between associated entities at the employee’s initiative;
  • providing greater certainty for investors, employers and employees by allowing the nominal life of greenfields agreements made in relation to the construction of a major project to be extended;
  • strengthening the Fair Work Act compliance and enforcement framework to address wage underpayments, ensure businesses have the confidence to hire and ensure employees receive their correct entitlements; and
  • introducing measures to support more efficient Fair Work Commission (FWC) processes.

Below is a breakdown of the key issues.

Casual and fixed-term employees

The Industrial Relations bill introduces, for the first time, a statutory definition of a casual employee that focuses on the offer and acceptance of employment and draws on common law principles.

The Bill is intended to prevent unfair outcomes in situations where employers have to pay an employee twice for the same entitlement. In the event that an ongoing employee is misclassified as casual, the Bill enables casual loading amounts to be offset against claims for leave and other entitlements in certain circumstances, to address any potential for ‘double-dipping’ when recognising the employee’s correct classification.

The Bill introduces a statutory obligation for employers to offer casual staff conversion to full or part-time employment after 12 months unless there are reasonable business grounds not to do so. The Bill also requires casual employees to be provided with a Casual Employment Information Statement published by the Fair Work Ombudsman (FWO).

The Bill introduces part-time flexibility provisions This will enable employers and employees to work together to agree additional hours of work to part-time employees who already work at least 16 hours per week, to be paid at ordinary rates of pay. Currently, under many awards, the only way a part‑time employee can work additional hours at ordinary rates of pay is to formally alter the regular pattern of hours. An ad hoc arrangement to work additional hours may attract overtime rates – even if an employee volunteers to work those additional hours.

Award simplification

To ensure flexibility for employers, especially small businesses in distressed sectors, the Bill will extend existing JobKeeper flexibilities in the Fair Work Act concerning duties and location of work to employers and employees to whom identified modern awards apply. These flexibilities, with appropriate employee safeguards, will be available for a period of 2 years from the passage of the Bill.

Enterprise and greenfield agreements

The Fair Work Commission (FWC) will no longer be required to be satisfied that the terms of an enterprise agreement do not exclude the safety net provided by the National Employment Standards (NES) and instead, the agreement must include a term which explains the interaction between the NES and enterprise agreements. The Fair Work Commission will also be required to approve agreements, as far as practicable within 21 working days.

The process for assessment of enterprise agreements against modern awards will also be clarified by requiring the FWC, in applying the better off overall test (BOOT), to:

  • only take into account patterns or kinds of work, or types of employment, that are currently engaged in or are reasonably foreseeable, not those that are hypothetical or not reasonably foreseeable;
  • have regard to the overall benefits (including non-monetary benefits) employees would receive under the agreement compared to a relevant modern award; and
  • have regard to any views relating to whether the agreement passes the BOOT expressed by employers and employees and their bargaining representatives.

The Bill will also enable the FWC to approve longer-term greenfield agreements which are a form of enterprise agreement used by new enterprises before they recruit any staff.

Greenfield agreements are commonly used in project-based industries, such as mining and construction. Under the legislation, greenfield agreements made in relation to the construction of a major project, are to specify a nominal expiry date of up to eight years after the day the agreement comes into operation. Where the greenfields agreement specifies a nominal expiry date more than four years after the day on which the FWC approves the agreement, the agreement must include a term that provides for annual pay increases for the nominal life of the agreement.

 

Compliance and enforcement

This Bill enhances the Fair Work Act compliance and enforcement framework to more effectively deter non-compliance with workplace laws and make it easier to recover wages when underpayment does occur.

To better deter non-compliance, the Bill introduces a new criminal offence for dishonest and systematic wage underpayments and increases the value and scope of civil penalties and orders that can be imposed for non‑compliance.

 

Fair Work Commission

The Bill includes measures to support more efficient FWC processes, to enable the FWC to:

  • deal with appeals ‘on the papers’ where appropriate;
  • vary or revoke decisions relating to enterprise agreements and workplace determinations more easily, to correct minor errors; and
  • deal more effectively with unmeritorious applications.

These measures will enable the FWC to deal with matters more expeditiously and promote effective allocation of its resources.

 

Further review of Modern Awards in distressed industries

In addition to the Industrial Relations bill, Christian Porter has released a letter in which he has requested the FWC conduct a review of modern awards in distressed industries. Mr Porter said that stakeholders have identified two changes the commission could (and should) make separate to the IR legislation:

  • To simplify pay arrangements by allowing “loaded rates” – for employers to pay employees a higher base rate of pay instead of penalty rates, on an opt-in basis so that workers are not financially worse off; and
  • To streamline classifications so that workers in retail, hospitality, restaurants, and registered clubs are not paid many different rates of pay based on their duties

 

Next steps for the Industrial Relations Bill

There will be months of discussion on the Bill, so it’s likely that decisions on the key areas won’t be made until well into 2021.

 

The full bill can be assessed here.

 

If you need human resources advice, consider the Industryus Membership. We offer a tailored HR solution according to the level of support needed. Call us on 07 5655 4047 or go online and book in a Free Introductory Session at our Gold Coast office or via Zoom.

 

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