Preparing to comply with the Forward with Fairness changes

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Preparing to comply with the Forward with Fairness changes

2010 might sound like a long time away, but the National Employment Standards have already been released and introduction of the Bill is less than two months away, so now is a good time to start preparing your organisation to be compliant with all the changes.

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2010 might sound like a long time away, but the National Employment Standards have already been released and introduction of the Bill is less than two months away, so now is a good time to start preparing your organisation to be compliant with all the changes.

The scope of work required to do this was covered in two sessions at the Industrial Relations Summit conference held in Sydney on 20/21 August 2008.

The main compliance areas

Tim Frost, partner and team leader, Workplace Relations at the large law firm Allens Arthur Robinson, identified six areas that organisations will need to audit in order to ensure compliance:

  • employment records

  • modern awards

  • dismissal provisions

  • National Employment Standards (NES)

  • the $100,000 remuneration threshold

  • abolition of AWAs, and use of ITEAs until 31 December 2009.

Frost recommended the actions noted below in each case.

Employment records

Following some controversy when WorkChoices first commenced in 2006, statutory record-keeping requirements became less complex. Employers are no longer required to keep records of date of birth, the name of each instrument under which the employee derives entitlements, the employee’s classification under each instrument, or the number of hours the employee is required to work each week.

However, they must keep records of employee’s name, employer’s name, whether employment is full-time or part-time, whether employment is permanent/temporary/casual, date of commencing employment, overtime hours worked, any hours averaging agreement (this provision will be removed from the Act in 2010 but may still appear in some awards or agreements), bonus/incentive/commission arrangements and payments, leave accruals and leave taken, any agreements to forgo leave, superannuation contributions and reasons for termination of employment.

Frost also recommended keeping records of any NAPSAs or PSAs that might apply to employees, awards and agreements that do apply, and the classification of each employee under any awards or agreements.

Note that provisions relating to record-keeping may be quite specific when the new legislation is introduced, and it will be advisable to study the Regulations as well as the Act to identify all provisions.

Modern awards

The process for developing modern awards is scheduled to run up until December 2009, with the intention that they too can commence on 1 January 2010. 

The proposed awards will probably be quite basic and follow a fairly standardised approach. In that respect, there may be overlaps with the NES which are also basic standards. It is anticipated that modern awards will cover 10 basic areas, plus include items such as a model flexibility clause and dispute resolution clause. However, the awards will not apply to employees earning over $100,000 per annum. 

The compliance implications of these changes are:

  • When an individual workplace agreement expires, eligible employees earning less than $100,000 per year will go back to award coverage.

  • Be aware of the expiry dates of all instruments, and assess whether it is necessary to negotiate new arrangements to replace them.

  • Identify employees earning more than $100,000 because they will not be award-covered from 1 January 2010.

  • Identify which awards and other instruments will apply to each employee as from the changeover date.

  • The expiry date of NAPSAs has currently been extended from 27 March 2009 until 31 December 2009, but provision exists to further extend the date if required.

Another presenter at the Summit, Stephen Trew, a partner at Holding Redlich, Solicitors, pointed out that the Australian Industrial Relations Commission (AIRC) has already done a lot of research on the issue of old versus new reference instruments, including preparing industry schedules. He recommended studying the AIRC website.

Dismissal provisions

More employees will be eligible to make claims of unfair dismissal from 1 January 2010. Nothing has been mentioned so far about the situation in relation to casual employees, so Frost predicts that there will be no changes to their provisions.

He also recommended preparing a formal dismissal policy if the organisation does not already have one, although noting that in marginal cases, technical non-compliance with one aspect of the policy could result in a claim. However, this would not matter in blatant cases, and overall it should result in fairer treatment of employees and more predictable outcomes.

The role and content of the Fair Dismissal Code are still unclear. The Code will definitely affect small businesses (less than 15 employees), but whether it will be binding or a guide to good practice is unknown. It is possible, but again uncertain, that the Code may cover larger employers as well. Even if it doesn’t, Frost recommended that large employers at least study it and consider adopting it as the basis of their policies.

NES

The NES have been widely publicised and dissected because they have already been released. They cover 10 basic areas and will expand on the current Australian Fair Pay and Conditions Standard. Because the NES are already released, this is the first compliance area you should look at.

You need to review all forms of employment contracts, HR policies and procedures to ensure they will be compliant with the NES, make changes as required and notify employees of those changes. Redundancy entitlements are an issue that needs particular care.

Frost regarded the 'reasonable extra hours' (in excess of 38) as a ‘sleeper' issue, given that many employees routinely work longer than 38 hours most weeks. He recommended that employers monitor this situation closely and make changes, as employees may be entitled to refuse some requests to work extra hours.

Trew suggested that one thing that could help here is to add a clause to contracts along the lines of 'we agree that these hours are reasonable'. But while this could help, it would not be definitive, and care would be required to ensure no duress was involved.

Employers should also set up procedures, including training of line managers, to ensure they will be ready to deal with employees’ requests for flexible working arrangements and extensions to parental leave. This includes documentation requirements and procedures for dealing with any disputes that arise

The Fair Work Information Statement (FWIS) is not yet available. The general opinion of conference attendees appeared to be that the previous Employment Fact Sheet was a piece of bureaucracy that achieved little, and compliance with it declined over time. The FWIS might prove to be more of the same, but nevertheless employers will be required to issue it to all employees.

The $100k salary threshold

Frost predicted some problems with this requirement. The amount will be indexed each year, so some employees will fluctuate just under and over the limit, for example due to salary reviews and promotions. It will be necessary to set up a system that monitors the situation of employees paid close to the threshold and identify those that fall into or out of award coverage.

In cases where employees go above the amount and lose award coverage, be prepared to consider other employment arrangements, such as common law contracts. Issues to consider include access to overtime pay, penalty rates, allowances, commissions and incentive/bonus payments. You will have to take the value of these payments into account to ensure that the employee is not worse off if he/she has to be placed under a new arrangement.

Abolition of AWAs

After checking and recording their expiry dates, you will need a strategy for phasing them out. This means identifying the source of each entitlement (NES, award provision, etc), particularly if the employee earns less than the proposed $100,000 threshold. The content of awards once they have been modernised will affect these decisions, so this is another grey area in some respects. ITEAs can be used as an interim measure until 31 December 2009. Note that neither AWAs nor ITEAs override State law provisions in areas such as equal opportunity, occupational health and safety, workers compensation, long service leave or child labour.

If you are looking at new agreements, employees are sure to ask 'what’s in it for me', so have your answers ready.

Because this is a relatively complex issue, particularly when employees are under the $100,000 threshold, it is important to start addressing it now, not wait until late 2009.

Summary

Trew noted that the Forward with Fairness changes have one definite advantage over the WorkChoices ones: there is a specified time period (until 31 December 2009) to digest the changes and respond to them appropriately, provided you are proactive about the planning process.

Assess the requirements of your business in relation to areas such as good faith bargaining and make sure you are prepared for when the changes commence. If you deal with unions, you can expect that they will be prepared.

When changes to any of the areas discussed above are made, ensure you keep record to prove that employees were notified in a reasonable way of the changes. Where changes are substantial, separate communication strategies are recommended.


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