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Preparing for the New Safety Net. Professor Andrew Stewart University of Adelaide & Piper Alderman 8th Annual Workforce Conference Melbourne, 22 September 2009. The Fair Work safety net.

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Preparing for the New Safety Net

Professor Andrew Stewart

University of Adelaide & Piper Alderman

8th Annual Workforce Conference

Melbourne, 22 September 2009


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The Fair Work safety net

  • A two part ‘safety net’ of minimum conditions under the Fair Work Act 2009, to commence on 1 January 2010

    • National Employment Standards (NES) for all national system employees (Pt 2-2)

    • standardised and simplified ‘modern awards’ for most such employees (Pt 2-3)

      • currently being created by AIRC under WR Act 1996 Pt 10A, continued in effect by TPCA Act (Fair Work (Transitional Provisions and Consequential Amendments) Act 2009) Sch 5


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The Fair Work safety net

  • Plus national minimum wage orders for award-free workers

    • to be set by FWA Minimum Wage Panel under FW Act Pt 2-6

    • first annual wage review in 2010, to take effect on 1 July

    • by 1 July 2011, there must be a minimum wage for juniors and trainees

      • TPCA Act Sch 9 cl 4


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Transitional arrangements

  • Australian Fair Pay Conditions Standard in Part 7 of Workplace Relations Act 1996 continues until end of 2009

    • TPCA Act Sch 4 cl 2

  • Minimum wages set under Part 7 Div 2 continue into 2010 and beyond, until displaced by modern awards or NMWOs

    • TPCA Act Sch 9 cl 5


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Transitional arrangements

  • Until modern awards take effect, ‘award-based transitional instruments’ can continue (TPCA Act Sch 3)

    • ie, pre-reform federal awards, NAPSAs

  • Query arrangements for State reference employers outside Victoria

    • presumably to be revealed in forthcoming amendments to FW Act


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Preparing for the NES

  • Affected employers need to review existing employment arrangements and ensure NES compliance by 1 January 2010

    • applies to all employees, including executives

    • unlike AFPCS, no exemption where old agreements deal with matters covered by NES


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Preparing for the NES

  • Key new entitlements/obligations

    • right to request flexible working arrangements

      • parents eligible if they have children below school age or with a disability

      • refusal by employer can be disputed, but only if employer has agreed

    • extended (unpaid) parental leave

      • if refused, agreed dispute resolution only


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Preparing for the NES

  • Key new entitlements/obligations (cont’d)

    • cashing out annual leave

    • directing when annual leave is taken

    • unpaid compassionate leave for casuals

    • community service leave

      • voluntary emergency management activities

      • jury service


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Preparing for the NES

Key new entitlements/obligations (cont’d)

redundancy pay

based on 2004 federal award standards

usual exceptions for casuals, fixed term contracts, etc

Fair Work Information Statement

new employees only


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Accrued entitlements

  • ‘Service’ defined in FW Act s 22

  • General rules for pre-NES service (TPCA Act Sch 4 cl 5)

    • service with an employer before 1 January 2010 generally counts towards NES entitlements

    • but where employee has already had the benefit of an entitlement, they cannot ‘double count’


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Accrued entitlements

  • Special rules

    • employee carries over whatever annual leave or paid personal/carer’s leave entitlements they have accrued before NES (TPCA Act Sch 4 cl 6)

      • but if leave taken after 1 January 2010, NES rules apply (eg as to cashing out, notification, etc)

    • for redundancy pay, pre-NES service counted only if employee had some entitlement as of 31 December 2009 (TPCA Act Sch 4 cl 5)

      • including under an award, agreement or employment contract


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Award modernisation

  • The challenge for the AIRC

    • review around 1700 awards/NAPSAs that apply to more than one business

    • standardise and simplify, to reduce number of awards and eliminate State/Territory-based differences in wages and conditions

    • avoid disadvantaging employees or increasing costs for business

    • complete process by end of 2009


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Award modernisation

  • Progress to date

    • 93 awards either ‘finalised’ or issued in exposure draft, for Stages 1 to 3

    • 30 more industries/occupations still to be dealt with in Stage 4, plus ‘miscellaneous’ award

      • note challenge of framing coverage of miscellaneous award

    • on track for 2010 start, but ongoing adjustments can be expected

      • plus review after first 2 years (TPCA Act Sch 5 cl 6)


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Transitional arrangements

  • Model/default transitional provisions announced in [2009] AIRCFB 800 (2 September 2009)

  • Some awards will have different arrangements, or move to modern award conditions immediately


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Transitional arrangements

  • Under default arrangements

    • most modern award provisions commence on 1 January 2010

    • but for minimum wage rates, loadings and penalty rates

      • six month ‘grace period’

      • phasing up or down of each rate or loading in 5 instalments from 1 July 2010, where significant discrepancy with transitional instrument


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Transitional arrangements

  • Two big queries about default provisions

    • no reductions in take-home pay

      • supplements protection offered by TPCA Act Sch 5 Pt 3

      • but is the protection automatic, or only on application to FWA?

    • how they apply to new businesses

      • commencing after 1 January 2010

      • commencing between 27 March 2009 and 1 January 2010


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Enterprise awards

  • Excluded from current modernisation process

  • No new enterprise awards from now on (except in Victorian public sector)

  • Parties can ask FWA to modernise existing enterprise awards (TPCA Act *)

    • unmodernised awards to expire at end of 2013

    • FWA’s discretion

    • to modernise or not to modernise?


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Award modernisation

  • An assessment of the process

    • The inevitable problems (and complaints) when standardising and simplifying

    • Government intervention – help or hindrance?

    • An encouragement to make enterprise agreements?

    • Is it worth the pain?