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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


More Impacts of the new IR Legislation

With the assistance of IR/HR consulting firm, HR Navigation, My Business continues its series on the implications for businesses of the new Fair Work legislation. The Fair Work Act re-opens the workplace to third party intervention and changes the unfair dismissal landscape for many employees. Employers need to consider the following changes and strategise how best to manage the changes for their individual business.

Unfair Dismissal

As of 1st July 2009, ‘Work-Choices’ exemptions with regard to unfair dismissal are gone, including the exemption to small and medium businesses with fewer than 100 employees. Businesses that fit the definition of a small business will have a 12 month qualifying period in which they can dismiss employees free from unfair dismissal, while those that do not meet the Fair Work definition of a small business will have a six month qualifying period.

Note this qualifying period is from the employee’s commencement date, it is not a grace period. After the relevant qualifying period, the full strength of unfair dismissal laws will be active.

From the 1st July 2009, the threshold used to define a small business for the purposes of applying the unfair dismissal arrangement is based on the business having less than 15 full-time equivalent employees. To determine if your business falls in this definition a business owner will have to perform a “full time equivalent” calculation.

This calculation is done by averaging the ordinary hours worked by all employees in the business over the four week period immediately prior to the employees’ termination, and dividing that by 38, being ordinary weekly hours. From 1st January 2011, the threshold used to define a small business for the purpose of applying the unfair dismissal arrangements will be based on a simple headcount of 15 employees.

Fair Dismissal Code

Small businesses will have to adhere to the ‘Fair Dismissal Code’. This is a checklist in which employers will be required to tick ALL the boxes in order for the dismissal to be deemed fair should it fall outside the qualifying period. The form includes delicate language like “employer believes on reasonable grounds”, “employee’s conduct is sufficiently serious” and “valid reason”.

Whether or not the employer’s belief is reasonable or their reason is valid, or whether the employee’s conduct is sufficiently serious, can and will be tested by the new super-body, ‘Fair Work Australia’ (FWA).


Redundancy also receives attention under the new legislation. The selection process for redundancies becomes relevant. The Act states that the selection should take place according to criteria such as skills, qualifications, responsibilities. It must be transparent and fairly applied otherwise it could give rise to discrimination claims.

For the first time employees will have a statutory entitlement to severance pay with the Act containing tables outlining minimum entitlements. There will be some exemptions from the obligation to pay severance pay. These include where the employee has less than 12 months’ continuous service with the employer immediately prior to the time of termination, or at the time the person was given notice of the termination, or where the employer is a small business employer which is defined as an employer which employs fewer than 15 employees at that particular time.

Transmission of Business

Under WorkChoices, a new employer was bound by the previous employer’s workplace agreements and/or any applicable industrial instruments (awards) for a period of 12 months, after which time the new employer’s industrial instrument would then apply. However, under the Fair Work Act there will no longer be a time limit on the application of the transferred instruments and they will instead transfer indefinitely.

Good Faith Bargaining

Collective Bargaining will be once again given preference. Should it be the case that even a single employee of your business is a trade union member, and convinces the majority of the merits of having a trade union negotiate on their behalf, you will be required by law to negotiate with the union. The Act also dictates the good faith bargaining requirements to be met. These include attending meetings, disclosing relevant information, giving genuine consideration and responding to proposals, and refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

Fair Work Australia

Fair Work Australia will become the industrial ‘quik-e-mart’ for Australian employers and employees. The super-body will replace the Australian Industrial Relations Commission, Australian Fair Pay Commission and Workplace Authority.

Its powers will include determining unfair dismissal applications, resolving workplace disputes, enforcing good faith bargaining and developing guidelines to assist employers and employees in implementing ‘family friendly’ work practices. The Workplace Ombudsman will be renamed the Fair Work Ombudsman and will also form part of this super body.

Role of Trade Unions

Right of entry rules enable permit-holders, normally union officials, to enter workplaces to investigate suspected contraventions of relevant legislation or industrial instruments, and to hold discussions with interested employees. Under Work Choices, these rights were significantly restricted. The new Act, however, permits the holding of discussions with employees at workplaces, so long as the workplace has employees whose industrial interests the permit holder’s union can represent. It is irrelevant if the employees are not at that time paid up union members.

Permit-holders also have expanded rights to inspect employee records when they investigate suspected contraventions. Under Work Choices, permit holders could not inspect non-member records. The new Act, however, enables permit-holders to inspect and/or make copies of any records or documents relevant to the suspected breach, irrespective of the nature of the records.

As a concession to concerns about the privacy of employee records, the Government will appoint a Privacy Commissioner to ensure workers privacy is maintained. This adds another level of bureaucracy as businesses are concerned about over-zealous unions exploiting the opportunity of unfettered access to non union members’ pay records for political means.

National Employment Standards

Industrial awards are set to be revolutionised. Currently there are over 4000 industrial awards. Effective 1st January 2010, there will only be less than 100. Employers will have to ensure their contracts or arrangements reflect the changes in these new awards. Failure to respond to changes in the award could mean you underpay or deny entitlements to employees who would have your business at risk of complaints and investigations.

From 1st January, 2010, new National Employment Standards will also be introduced, these include:
1. Maximum 38 hours per week plus ‘reasonable’ additional working hours
2. Request for flexible working arrangements
3. 12 months unpaid parental leave and related entitlements and option for an additional 12 months unpaid parental leave
4. 4 weeks paid annual leave
5. 10 days Personal/Carer’s leave and two days compassionate leave
6. Community service leave
7. Long service leave
8. Public holidays
9. Notice of termination and redundancy pay
10. Fair Work Information Statement.

Flexibility Agreements

The new ‘modern’ awards will provide for a level of flexibility via the use of a flexibility clause which will allow an employer and employee to come to an alternate agreement regarding:

• arrangements for when work is performed
• overtime rates
• penalty rates
• allowances; and
• leave loading.

However, there will be strict conditions for these ‘flexibility’ agreements and an employee cannot be coerced into signing an agreement nor can it result in an overall reduction in terms and conditions for the employee. Flexibility Agreements must:

• be set out in writing
• be signed by each party
• state each and every term of the award that is being varied
• detail in what way the term is varied; and
• detail exactly how it does not disadvantage the employee.

Verbal arrangements or simple one line arrangements in a letter of offer to employee will not be permissible.

Businesses need to not only consider the changes, but ensure that they are operating legally.

Robyn Anderson
My Business
Aug 2009


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