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Media Release – Fair Work Act Review

Published on August 7, 2012 by Peter Punch

BULLETIN TO CARROLL & O’DEA CLIENTS
The recently released Report of the Independent Panel conducting the Review of the Fair Work Act — “Towards more productive and equitable workplaces; an evaluation of the Fair Work legislation” has attracted very considerable comment, much of it is politically motivated. As industrial relations has been at the epicentre of Australian politics since before Federation, it is hardly surprising, indeed inevitable, that the Report would attract a lot of politically motivated comment.
But what do you – our clients – need to know about the Report, with all the political rhetoric and posturing about what it does or does not say or recommend, put to one side?
There are a few things at the “big picture” level, and some minutiae that are interesting. Our comments are interwoven in the text that follows.
At the “big picture” level, this much is reasonably clear.
First, the Panel have found that, looked at overall, the Fair Work Act is operating broadly as was intended.
[We at Workplace Solutions are not surprise by that finding.]
Second, the Panel was not persuaded that the recent slow down in productivity levels in Australia can be attributed to the Act.
[We think the Panel’s arguments in that regard are quite cogent – productivity has been on the wane since before WorkChoices!]
Third, over the last 20 years there has been a very substantial change in the Australian framework for wages, working conditions and employment, with the focus moving away from compulsory conciliation and arbitration of disputes to enterprise bargaining underpinned by a safety net of minimum conditions, recognition of the right to strike in pursuit of collective agreement, and limits on access to arbitration. Those changes, the Panel believes, have delivered outcomes conducive to our economic prosperity, and are not to be lightly put at risk.
[This is a bit of a lecture to stakeholders, but at least it is based on evidence not political ideology.]
Fourth, the Panel was not persuaded to recommend all or most of the major changes to the Act that employer representatives were pressing for mainly because the employers did not produce tangible evidence to demonstrate that what they say were real deficiencies (or major omissions) either existed or required the wholesale changes they sought.
[Again, not surprising – the terms of Reference for the Review made it clear that complaints of deficiencies in the Act had to be supported by evidence, not anecdotes or ideology.]
Fifth, the Panel recommended that the national tribunal get a different name other than “Fair Work Australia” because, they thought, it was confusing bearing in mind all the ways in which the rubric “fair work” is used in the legislation. Something with the word “Commission” would be much preferable.
[Excellent recommendation as far as we are concerned – and they are agreeing with the new President of the tribunal, Justice Iain Ross.]
As to the minutiae ?
There are 53 recommendations. Many of them go to matters of detail and some are far more significant than others.  Without being exhaustive, those recommendations that appear to have the most significance for all employers and employees (remembering that about 80% of the workforce is un-unionised) are in our view as follows.
  1. The time limit for bringing unfair dismissal claims should be extended from 14 days back to the original time limit when unfair dismissal laws were first brought into Federal law in 1994 – 21 days from the date of dismissal.  
[This is OK when coupled with the next item.]
  1. On the other hand, the time limit for bringing a general protections claim (generally known as an “adverse action” claim) should be brought back to 21 days from the current 60 days – ie the same as for unfair dismissal.
[A good recommendation – the 60 day limit is too long and could be used to get around the 14 day unfair dismissal time limit. It also prevents people having “two bites of the cherry” – bring an unfair dismissal claim and if you don’t settle at conciliation, discontinue and bring an adverse action claim. That was not good.]
  1. There should be a reintroduction of the previous provisions whereby an unsuccessful party in an unfair dismissal or adverse action claim could be exposed to an order to pay the other party’s costs if that unsuccessful party had unreasonably failed to discontinue proceedings, or agree to terms to settle the matter or through a party’s unreasonable conduct caused the other party to incur costs.
[Another good recommendation – if there should be a widely available right to bring an unfair dismissal claim, then there should also be a risk that unreasonable behaviour will result in a costs penalty. It is probably the only way to try to reduce ‘go away money’.]
  1. The National Employment Standards ought be amended to make it clear that an employee’s period of work on workers’ compensation would not count toward the accumulation of leave entitlements.
[We agree with this too – it will avoid the current uncertainties and it is very hard to see why an employee should be accumulating leave entitlements over what might well be a lengthy period of incapacity.]
  1. The notice period for termination of an Individual Flexibility Agreement ought be extended from the current 28 days, to 90 days.
[This is an improvement, but that change but plus some other minor changes the Panel suggests may help to make IFAs a little more attractive than they are now.]
What about more arbitration?
Since the Qantas dispute that resulted in the grounding of its fleet last October, there has been an ever growing discussion about whether Australia needs to make arbitration of industrial disputes more available than it is under the current system (particularly for long running disputes or situations where employees lack bargaining power). The Panel did not recommend any significant change, which was a slight surprise.
Did some opportunities get missed?
That is a matter of opinion – but as the Panel was in reality a technical rather than a broad policy review of an Act that is less than three years old, it is hard to be very critical if one is being totally fair (as distinct from undertaking a political exercise).
One matter we think should have resulted in a recommendation for change was the decision in Hull & Moody that in effect allows an enterprise agreement to make provision for annual leave pay to be paid in advance, so that employees end up taking annual leave without panel. The Panel had misgivings about it, and hoped it does not become widespread, but did not recommend legislative change to stop it happening. We respectfully believe it is just totally inconsistent with the whole concept of annual leave, as it will tend to discourage employees taking their entitlement to leave for the purpose it is conferred. The initiative does help to reduce or eliminate excess accumulations of leave, but employers have the ability to manage that anyway. We hope, along with the Panel, that the practice does not become widespread.
But how much will actually change?
The Federal Government has said it will consult with stakeholders before moving any amendments to federal law in response to the Panel’s Report. Many of the Recommendations seem to be uncontroversial and we would hope that they will be implemented in due course, maybe by the start of next year. However some of the Recommendations will be resisted by employer organisations or unions, so the political climate may result in some of the recommendations being “too hard” this side of the next scheduled Federal election (probably a year or more off).
More comments to come…
In future bulletins we will look at particular aspects of the Report in more detail and provide our analysis. If you have any questions to ask about any aspect of the Report, or  how its Recommendations, if implemented, might affect your situation, please contact Peter or any member of our Workplace Solutions Group.
Workplace Solution group
7 August 2012

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