Attachment A: Productivity Commission Inquiry into the Workplace Relations Framework - Summary of NFF recommendations Subject matter FW Act provision Problem Solution Category Introduction Objects of the Fair Work Act 3(c) Restricts the capacity of the workplace relations framework to evolve over time. AWAs were an accepted element of federal workplace relations law long before 2006. With appropriate safeguards, they can be effective. Delete the object. barrier Definitions – ‘associated entity’ 12, 311(6) The definition is imported from the Corporations Act 2010, where it has a particular function and purpose. The definition is not suitable for the purpose of the FW Act, and is more complex than necessary. Adopt a ‘stand-alone’ definition of ‘associated entity’ that is fit for purpose in relation to the FW Act. COMPLEXITY Definitions – ‘lock out’ 19, 411 Employers can only take industrial action in response to employee action, and when they do, their only option is to lock employees out completely. Employees have unlimited range in terms of the industrial action they can take. This means that employer response action is either not taken or criticised as disproportionate. Expand the type of industrial action employers can take to cover other restrictions on the performance of work. Ensure that employer action does not include action taken that is agreed to by employees or in connection with performance management. BALANCE Definition – ‘small business employer’ 23 Workforce numbers fluctuate in businesses that rely on casual employment. A business might be a ‘small business’ one day and not a ‘small business’ the next. The current rules create uncertainty about the rules that apply to businesses of this kind. Exclude casuals other than casuals (those who have been employed on a regular and systematic basis over a period of 12 months or more). COMPLEXITY Interaction rules – long service leave (LSL) 27, 29; 113A, 155 The current framework was designed in anticipation of a national LSL standard. No progress has been made on this issue in more than five years. At the same time, business has lost the capacity to implement national long service leave schemes through enterprise bargaining and casual loadings can no longer factor for long service leave. Many casual Permit enterprise agreements to prevail over State and Territory LSL laws to the extent of inconsistency BARRIER
employees gained a windfall when they became entitled to LSL for the first time, with retrospective effect. Employers were hit with this cost overnight without any phasing-in or transitional arrangements. Coverage – coastal shipping Part 1-3, Div 3 Under the former WR Act, an exemption from coverage led to an increase in ships trading around the Australian coast. This position was reversed by the FW Act, which covered foreign ships in the coastal trade for the first time. The change reduced the number of ships trading around the coast, significantly increased shipping costs and introduced unworkable complexity. Freight that should be carried by sea is now being carried by road. Restore the exemption of foreign ships in the coastal trade from FW Act coverage. BARRIER Interaction rules – enterprise agreements and modern award 57 While an enterprise agreement applies, a modern award does not apply. As a result, enterprise agreements must be comprehensive in scope in order to pass the BOOT. This is a disincentive to bargain - the scope of issues cannot be confined to issues of particular concern to the workplace. Clarify that an enterprise agreement applies, and a modern award does not apply, to the extent of inconsistency. BARRIER The National Employment Standards Flexible work arrangements 66 Current provisions permit State and Territory laws to undermine national policy in relation to requests for flexible working arrangements. Cover the field in relation to requests for flexible working arrangements COMPLEXITY Annual leave 88 There is no capacity for employers to direct the taking of leave. Employees who do not agree to take leave can accrue it indefinitely, undermining the policy intent of providing regular rest and recreation. Employers cannot unreasonably refuse to agree to a leave request, but employees have no equivalent responsibility. Give employers the right to direct the taking of leave where attempts to reach agreement have failed, with appropriate safeguards. Alternatively, require employees not to unreasonably refuse a request to take leave. BALANCE Annual leave – loaded rates 88(1) FWC decisions have interpreted this provision as preventing pre-payment of annual leave (eg. in loaded rates) despite time off for leave being given at a later time. Inconsistency of approach in FWC has created uncertainty and the FWC approach has reduced flexibility. Provide for flexibility as to when leave is paid for and taken, subject to appropriate safeguards. BARRIER Annual leave – 90(2) The current provision is ambiguous, causing significant Clarify that the provision simply COMPLEXITY
proportionate leave payment on termination confusion over what annual leave payments must be paid to an employee on termination of employment. On one interpretation, the provision requires the payment of pro rata annual leave loading on termination, despite any contrary modern award term. requires payment of untaken accrued annual leave on termination but does not deal with any other payments such as leave loading, which are dealt with in modern awards and enterprise agreements. Compassionate leave 104 2 days paid leave is available each time a member of an employee’s family or household ‘contracts or develops’ an illness that poses a serious threat to life. The entitlement is triggered, for example, when a person is diagnosed with terminal illness, whether or not the threat is imminent and regardless of whether the person requires care or support. Confine the paid leave entitlement in relation to illness that poses a ‘serious and imminent’ threat to life. BALANCE Long service leave 113, 155 As discussed above, the current framework was designed in anticipation of a national LSL standard. No progress has been made on this issue in more than five years. Business requires certainty at a national level about the LSL rules that apply. Casual loadings are unable to be paid in lieu of LSL, despite longstanding historical provisions to this effect. A national LSL standard should be developed without delay or the proposal abandoned, with interaction rules reversed so that the matter can be resolved through enterprise bargaining. Modern awards must be permitted to deal with LSL or payment in lieu of LSL for casuals. BARRIER Public holidays 114 Employers have no right to direct work on a public holiday and employees can refuse any such request. This tips the balance too far – in many industries, including agriculture, there is work to be done on public holidays and employers need the capacity to manage their business. Enable employers to require work on public holidays by advance notice to employees. BALANCE Redundancy – variation for other employment 120 The ability to reduce redundancy pay obligations where retrenched employees gain other employment is too narrow. If an employer creates the opportunity that leads to an employee accepting another job, they should be able to seek a reduction in redundancy pay, whether or not they actually “obtained” that employment for the employee. Extend eligibility to apply for reduced pay to employers who facilitate an offer of employment that is accepted by the employee. BALANCE Redundancy – small 121 The current wording permits modern awards to undermine Make clear that small business COMPLEXITY
approval approval. An employer whose circumstances have changed and who no longer seeks agreement approval must nevertheless apply, but then discontinue the application under s588. This is form over substance. An employer should not be compelled to seek approval of an agreement in every case and employee representatives should not be able to apply for agreement approval absent the consent of the employer. making of applications for agreement approval. In the case of applications by employee bargaining representatives, require consent of the employer upon filing of the application. Agreement approval – the BOOT 186(2)(d), 193 The BOOT is a disincentive to bargaining because it seeks to improve the position of employees at the expense of employers. The BOOT drives up labour costs without any requirement for productivity measures or offsets, despite the objects of the Part 2-4 which support enterprise agreements that deliver productivity benefits. The no-disadvantage test was more workable – it preserved the position of employee’s overall, but there was greater scope for trading of rights and responsibilities without increasing overall costs. Restore the no-disadvantage test in preference to the BOOT. Make workplace productivity a key objective. Prohibit pattern bargaining. BARRIER Fairly chosen requirement 186(3) This requirement is sometimes used as a device to reject innovative enterprise agreements. Employees must approve an agreement before it is made – this is the safeguard to ensure that employees support the making of the agreement. Allowing FWC to dictate the scope of agreements or reject agreements because of their own preferences for how an employer should structure their business is an unreasonable fetter on flexibility. The fairly chosen requirement should be removed. BARRIER Greenfields agreements – approval 186(5) Greenfields agreements can only be approved if they are in the public interest. This sets the bar too high, as the private interests of the parties are insufficient to meet the test. In contrast, agreements that fail the BOOT can nevertheless be approved as long as approval is not contrary to the public interest. Provide for greenfields agreements to be approved if it is not contrary to the public interest. BARRIER Unlawful terms 194 There is much confusion and uncertainty about the types of terms that are unlawful, particularly in relation to right of entry. Case law has developed to the point where the restriction on terms dealing with right of entry is almost Revise the list of unlawful terms, to include: terms dealing with unfair dismissal, BARRIER