Journal of Industrial
Relations
http://jir.sagepub.com/
Industrial Legislation in 2009
Carolyn Sutherland and Joellen Riley
JIR 2010 52: 275
DOI: 10.1177/0022185610365626
The online version of this article can be found at:
http://jir.sagepub.com/content/52/3/275
Published by:
http://www.sagepublications.com
On behalf of:
Industrial Relations Society of Australia
Additional services and information for Journal of Industrial Relations can be found at:
Email Alerts: http://jir.sagepub.com/cgi/alerts
Subscriptions: http://jir.sagepub.com/subscriptions
Reprints: http://www.sagepub.com/journalsReprints.nav
Permissions: http://www.sagepub.com/journalsPermissions.nav
Citations: http://jir.sagepub.com/content/52/3/275.refs.html
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
article
Journal of Industrial Relations
© Industrial Relations Society of Australia
SAGE Publications Ltd,
Los Angeles, London, New Delhi, Singapore and Washington DC
ISSN 0022-1856, 52(3) 275–287
[DOI: 10.1177/0022185610365626]
Industrial Legislation in 2009
Carolyn Sutherland
Monash University, Australia
Joellen Riley
University of Sydney, Australia
Abstract: In 2009, two major pieces of industrial legislation were enacted to give
effect to the Labor Government’s commitment to replace Work Choices with
laws for ‘Fair Work’. The Fair Work Act 2009 (Cth) promises to bring greater
stability and simplicity to Australia’s workplace relations system. However,
transitional rules in the Fair Work (Transitional Provisions and Consequential
Amendments) Act 2009 (Cth) mean that it will be some time before participants
in the system can enjoy these benefits. This review gives a brief account of both
Acts before examining in more detail the enterprise bargaining rules which
commenced operating in July under the supervision of a new institution, Fair
Work Australia. We then consider two aspects of the Fair Work legislation which
are most likely to provoke controversy when they commence operating in 2010,
the adverse action and transfer of business provisions. We also look at the steps
taken by federal and state governments to move towards a national system of
workplace relations.
Keywords: employment protection; Fair Work Act; industrial laws; workplace relations
Contact addresses: Carolyn Sutherland, Faculty of Business and Economics, Monash
University, PO Box 197, Caulfield East, 3145, Australia. [email: carolyn.sutherland@
buseco.monash.edu.au]; Joellen Riley, Law Faculty, University of Sydney, 2006,
Australia. [email: joellen.riley@usyd.edu.au]
275
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
Introduction: A National System, At Last?
Australia’s system of industrial relations laws evolved further in the direction of
a truly national system over the course of 2009, thanks to the enactment of the
Fair Work Act 2009 (Cth) (FW Act) and a number of States’ decisions to refer
powers over industrial matters to the Commonwealth. At the time of writing,
Western Australia was yet to join in an agreement to refer; however, the other
States have all taken steps to join a cooperative federal system, based on the recommendations of the Williams Report (Williams, 2007). These developments
provide some basis for optimism that Australia may finally enjoy some stability
in its industrial relations laws after more than a decade of frequent change.
Stewart (2009: 50) has opined that the FW Act itself promises a more stable
labour law system than we have witnessed in the past, largely due to the balanced ‘pragmatism’ evident in the policy choices enshrined in the legislation.
This report considers Stewart’s reflection. First, we survey the general framework of the new Act and the transitional provisions, before focusing on the
enterprise bargaining rules that commenced operating in the ‘bridging period’
in the second half of 2009. We then consider some aspects of the legislation
that are most likely to generate controversy as the new laws are tested. In particular, we include some observations on the new workplace rights against
‘adverse action’ and the transfer of business provisions. Some (necessarily limited) comments on steps taken by the States to facilitate a national system are
also included.
Architecture of the Fair Work Act
Given the novelty of the legislation and the need for many industrial relations and human resources professionals to quickly learn how to navigate this
weighty volume of laws, it is useful to first set out the essential structure of the
legislation.
The FW Act comprises six chapters. Objects of the Act, interpretation
provisions (including the general dictionary) and application provisions are
contained in Chapter 1. Unlike the Workplace Relations Act 1996 (Cth) (WR
Act), which dedicated its earliest Parts to powers and functions of the various
regulatory institutions, the FW Act moves directly in Chapter 2 to the Terms
and Conditions of Employment, starting with the 10 National Employment
Standards (NES) in Part 2–2; Modern awards in Part 2–3; Enterprise
Agreements in Part 2–4; Workplace Determinations in Part 2–5; Minimum
wages in Part 2–6; Equal Remuneration in Part 2–7; Transfer of Business in
Part 2–8; and a miscellany of ‘other terms and conditions’ (such as frequency of
payment of wages; and the high income threshold) in a final Part 2–9. So all of
the provisions dealing with methods for determining a worker’s entitlement to
pay and conditions at work can be found by consulting Chapter 2.
Chapter 3 sets out ‘Rights and Responsibilities of Employees, Employers,
Organisations, etc’. Part 3–1 ‘General Protections’ contains all of the rights
276
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
previously scattered throughout the WR Act. So the right now enshrined in FW
Act ss 343–345 against coercion in the making of agreements and arrangements
picks up the former right against coercion in WR Act s 400. The rights against
adverse action for joining or failing to join a union or engaging in any other
industrial activity in FW Act ss 346–350 pick up the freedom of associ­ation
rights in WR Act ss 778–813. The right not to be subjected to discrimination
in FW Act s 351 covers territory formerly dealt with in the ‘unlawful termination’ provisions in WR Act s 659. The protections against ‘sham contracting
arrangements’ (ensuring that vulnerable workers are not wrongly classified as
independent contractors) in FW Act ss 357–359, pick up the provisions added
to the WR Act rights (ss 900–905) at the time the Independent Contractors Act
2006 (Cth) was introduced.
The final Division of this Part (Div 8 – Compliance) includes provisions on
employees’ rights when the adverse action taken against them in breach of one
of these rights is dismissal. The main unfair dismissal provisions follow in the
next Part 3–2 (ss 379–405). Restoration of unfair dismissal protections, even
for small business employees, has been well documented in other writings (see
Chapman, 2009), so we will not cover those provisions here.
The right to take protected industrial action in the course of enterprise bargaining is also treated as a Chapter 3 right, so the provisions formerly dealt
with in WR Act Part 9 comprise Part 3–3. Although now construed as ‘workplace rights’, the controls on taking protected industrial action remain quite
tightly constrained. For example, there are still requirements to hold secret
ballots before taking action (ss 435–469). Unprotected action is still subject to
compulsory ‘stop orders’ issued by Fair Work Australia (FWA): s 418. FWA
retains a power to suspend bargaining that threatens significant economic
harm: ss 423–430. Likewise, there is still provision for a Ministerial declaration
that industrial action cease: ss 431–434. Payment for periods of unprotected
action are still prohibited: ss 474. Unprotected industrial action will continue
to cause employees to be docked a minimum of four hours pay (as was introduced by Work Choices). The strike pay rules for protected action return to a
­prohibition on payment for the duration of the action: ss 470–473.
Rights of industrial organizations also come within Chapter 3. Union rights
of entry are found in Part 3–4. Employers’ rights to stand down workers are in
Part 3–5. A final Part 3–6 mops up a miscellany of ‘other rights and responsibilities’ including the obligations to consult on certain dismissals (s 531) and
employers’ obligations to keep pay records: ss 535–536.
Now that the Act has framed wages and working conditions (Chapter 2),
and workplace rights and obligations (Chapter 3), it deals in Chapter 4 with
compliance and enforcement issues. It is here we find provisions for bringing
civil and criminal actions to enforce the obligations in Chapters 2 and 3. Part
4–2 deals with the jurisdiction of the Federal Court and Federal Magistrates
Court.
All the mundane administrative provisions, establishing and empowering
FWA and the Office of the Fair Work Ombudsman, including the ­inspectorate,
277
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
are left to Chapter 5. Chapter 6 deals with a raft of miscellaneous matters,
including multiple actions (Part 6–1) and FWA’s role in dealing with disputes
(Part 6–2) including the model dispute resolution clause (s 737 and Fair Work
Regulations Reg 6.01 and Sched 6.1), and FWA’s powers of private arbitration:
ss 738–9.
The adoption of a logical architectural framework for the FW Act goes a
long way towards addressing the problems associated with the complexity of
the Work Choices legislation (see Stewart, 2005). As a result, all participants
in the system should find the legislation easier to navigate than its predecessor.
They will also be assisted by clearer language, and the inclusion of a comprehensive dictionary, helpful explanatory notes and cross-references. Inevitably,
however, the benefits of this newfound simplicity will not be fully experienced
until the transition to the Fair Work system is complete.
Transitional Legislation
The provisions governing the transition to the Fair Work system are set out
in separate legislation, the Fair Work (Transitional Provisions and Consequential
Amendments) Act 2009 (Cth) (TPCA Act). The TPCA Act repealed the WR
Act, with the exception of Schedules 1 and 10 which were renamed the Fair
Work (Registered Organisations) Act 2009. However, the TPCA Act continued
the operation of certain parts of the WR Act during the ‘bridging period’ from
1 July 2009 to 31 December 2009. For example, Schedule 4 of the TPCA Act
continued the application of the Australian Fair Pay and Conditions Standard
prior to the commencement of the new NES on 1 January 2010, and Schedule 7
implemented the transitional rules for agreement-making which are ­discussed
in the next section.
The TPCA Act also includes provisions that deal with the continued operation of various awards, workplace agreements and other industrial instruments
made before the commencement of the FW Act (Schedule 3). The old rules
in the WR Act govern the content of these ‘transitional instruments’ and their
interaction with other industrial instruments. However, the NES in the FW
Act, and any higher base rates of pay in modern awards, will override these
instruments from 1 January 2010. This legislative displacement of agreed
outcomes was considered necessary to overcome any unfairness arising from
the continued operation of Work Choices Australian Workplace Agreements
(AWAs) (Gillard, 2009: 3227). These complex arrangements may continue
indefinitely since the TPCA Act does not impose an automatic termination
date for most of these transitional instruments.
Agreement-making in Transition
Since Labor came to power in November 2007, the Rudd Government has
implemented reforms to the agreement-making rules in stages, in a bid to
address the public’s concern about the erosion of employment conditions under
278
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
Work Choices. First, there were the transitional amendments that were enacted in early 2008 to address the most pressing issues from the Government’s
point of view. These changes removed the capacity for any new individual
AWA to be made and reintroduced a ‘no disadvantage test’ and closer scrutiny
of agreements by the regulator (see Sutherland, 2009). These initial reforms
took effect from March 2008 to June 2009. They were replaced by hybrid rules
– combining elements of the transitional and Fair Work systems – which were
operational for a ‘bridging period’ from 1 July 2009 until the commencement
of the Fair Work system on 1 January 2010.
The creation of a bridging period was necessary to allow the bulk of the new
agreement-making rules to start operating before the commencement of modern awards and the NES. Since these instruments provide the benchmark for
the new ‘better off overall test’, this test would not commence operating until
1 January 2010. During the bridging period, the ‘no disadvantage test’ was
applied, requiring that employees not be disadvantaged overall by the agreement
in comparison with the applicable wages and conditions under existing awards
and other relevant instruments (see TPCA Act Schedule 7). Otherwise, the new
agreement-making rules in Part 2–4 of the FW Act commenced operating during the bridging period under the supervision of the new regulator, FWA. In
this role, FWA is required to examine agreement-making processes and outcomes much more rigorously than its predecessor, the Workplace Authority.
In terms of content, the new Fair Work rules require FWA to ensure that
agreements include a dispute resolution clause that empowers FWA or an
independent person to settle disputes (s 186[6]). The parties are required to
negotiate a flexibility term and a consultation term, otherwise model provisions are automatically incorporated into the agreement (ss 202–5). Similarly,
if a nominal expiry date is omitted from the agreement, a default expiry of four
years after commencement of the agreement is deemed to apply (s 186[5]).
FWA is also required to remove any ‘unlawful terms’ from agreements. This
includes terms which are discriminatory, or which require the payment of a
bargaining services fee, or which are inconsistent with the unfair dismissal,
industrial action, right of entry or general protection provisions in the Fair
Work legislation (ss 194–5).
There are a number of mandatory procedural rules such as the requirement
for employers to give employees access to agreements (including any incorporated material) at least seven days prior to a vote and to explain the effect
of the agreement to employees, and for employees to genuinely agree to the
arrangement (ss 180, 188). Significantly, FWA has confirmed that it has no
option but to reject an agreement where the parties have failed to comply with
these procedural pre-requisites (FWA, 2009c). In contrast, where FWA has
concerns about compliance with the rules about content, such as the ‘no disadvantage test’, the employer will be given an opportunity to address the concern
by providing a written undertaking.
In compliance with the legislation, FWA has adopted approval processes
that are much more rigorous than the process of ‘rubber stamping’ agreements,
279
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
which was imposed upon the Workplace Authority by the Work Choices laws.
Nevertheless, this does not appear to have inhibited FWA’s efficiency in the
initial stages of operation of the new system. Although FWA has not met the
Government’s optimistic expectation that agreements would be approved by
FWA within seven days of lodgement (House of Representatives, 2008: 121),
a glance through early approval decisions suggests that it was common for
agreements to be approved within a month of lodgement. Further, it appears
that the tightened legislative requirements for agreement-making have rarely
presented an insurmountable hurdle for the parties in the first few months of
the system’s operation. FWA has revealed that only two out of a total of 213
agreements approved between 1 July 2009 and 30 September 2009 were passed
with undertakings, while only two agreements were rejected by FWA during
this period and therefore did not come into operation (Nassios, 2009: 58).
The process adopted by FWA addresses the problem of the lack of transparency involved in the Workplace Authority’s application of the ‘fairness test’.
Lodged enterprise agreements are published on the FWA website pending the
outcome of the approval process. If FWA decides to approve an agreement, its
decision is published with the agreement itself: see ss 201(3), 601 FW Act. This
ensures that anyone viewing the agreement has the opportunity to take into
account any undertakings that have been given by employers.
While the improved transparency of the approval process is welcome, it
should be acknowledged that FWA’s written reasons for decisions are often
very short, noting that the bare requirements of the legislation have been met.
It would be helpful if these decisions were supplemented by a detailed guide
to the ‘no disadvantage test’ or the ‘better off overall test’ to replace the No
Disadvantage Test policy guide published by the Workplace Authority. Such
a guide could give advance notice to bargaining participants about FWA’s
approach to such matters as the assessment of non-monetary benefits (to offset monetary disadvantage) and the use of reconciliation clauses to address
­individual disadvantage under the agreement.
Once the Fair Work system commenced in full on 1 January, the ‘better off
overall test’ replaced the transitional ‘no disadvantage test’. The two tests are
similar in that they are each designed to ensure that employees are not disadvantaged by the overall effect of an agreement. The main difference is that
the benchmark for the ‘no disadvantage test’ incorporates an array of existing
awards and industrial instruments, whereas the ‘better off overall test’ adopts
modern awards as its benchmark. Fair Work agreements must also be consistent
with the NES. Once modern awards have become fully operational, it should
be much simpler to identify and apply the correct benchmark for agreementmaking. Further, it will no longer be necessary for the supervising institution
to ‘designate’ awards for its assessment since the award ­modernization process
has eliminated the gaps in award coverage.
280
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
Forms of Enterprise Bargaining
With various iterations of the bargaining rules operating at different points
in 2009, it was not at all straightforward for bargaining participants to piece
together their rights and obligations. For example, it was difficult to pin down
the types of agreements that could be made at any particular time. The individual transitional employment agreements (ITEAs), which were introduced
as an immediate replacement for AWAs in March 2008, could be made until
31 December 2009. In contrast, the employer greenfields agreements introduced under Work Choices could only be made until 30 June 2009. Collective
agreements could be made at all times, but from 1 July onwards, these agreements were no longer called union and non-union workplace agreements. All
­agreements simply became known as ‘enterprise agreements’.
Although there is no longer a separate stream of bargaining rules applying to
agreements made with unions, there are many ways in which the Act provides
for union involvement in agreement-making. The Fair Work laws require
employers to provide a notice to employees about their right to representation in the bargaining process, with the union as the default representative for
union members (ss 173–8). The new good faith bargaining rules then require
employers to recognize these employee representatives (s 228). For a discussion of the early cases under the bargaining rules, see Catanzariti and Brown’s
review of major cases in this issue.
Once an agreement has been finalized and endorsed by a majority of
employees, a union which has been involved in bargaining, as a representative of one or more employees, may initiate the approval process at FWA (s
185). This contrasts with the Work Choices system where the Office of the
Employment Advocate and the Workplace Authority relied almost exclusively on the application and supporting information provided by the employer.
At the approval stage, a union may apply to be bound by the agreement, but
only if it has acted as a bargaining representative (s 183). A union cannot
become bound by an agreement if it has been excluded from the bargaining
process.
While the FW Act removes the statutory distinction between union and
non-union agreement-making, the rules create two distinct bargaining streams:
one for single enterprises and the other for multiple enterprises. The singleenterprise bargaining stream may be accessed by single employers and by two
or more related employers. Employers with interests in common may bargain as a single employer where they have obtained a ‘single interest employer
authorisation’ from FWA: s 182(2), Part 2–4 Div 10 FW Act. Early examples
of such authorizations include those obtained by a group of Lutheran schools
in Queensland (FWA, 2009a) and by Domino’s Pizza Enterprises Limited and
156 of its franchisees (FWA, 2009b).
The FW Act provides broader scope for multi-employer bargaining. Any
group of employers may access the multi-employer bargaining stream (s
172[3]), whereas the WR Act had required employers to satisfy a public ­interest
281
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
test before bargaining together. However, industrial action is not protected
within this stream (s 413) and the good faith bargaining rules only apply to
multi-employer bargaining in low-paid sectors (s 229[2]).
The low-paid bargaining stream offers a new form of multi-employer
bargaining. This option is a significant development because the rules for this
stream allow FWA to arbitrate an outcome where the parties have genuinely
tried to negotiate their first enterprise agreement but have been unable to
reach a conclusion (ss 262–3). This form of bargaining is open to employers
and employees in low-paid sectors only. While there is no definition provided
in the Act, the Government has indicated that child care, aged care, community services, security and cleaning are all industries where low-paid bargaining
might be appropriate to assist those who might lack the skills, bargaining
power or resources to engage in enterprise bargaining on their own (House of
Representatives, 2008: xxxix, xlii).
It remains to be seen whether the new framework will be successful in promoting bargaining, and improving outcomes, for the low-paid. The ACTU is
hopeful that the facilitation of bargaining for these workers will help to address
gender pay inequality, given that a contributing factor to such inequality is
the high proportion of women who are reliant on awards for their minimum
wage (Lawrence, 2009). Keith Ewing (2008) has expressed optimism about the
capacity of low-paid bargaining, as a form of sectoral bargaining, to increase
the density of collective bargaining overall. On the other hand, Andrew
Stewart has been more cautious about the capacity of the new framework to
stimulate bargaining in sectors that have previously relied on awards, noting
that considerable Governmental intervention would be required to secure such
an outcome (Workplace Express, 2009b).
Adverse Action
The range of workplace rights in Part 3.1 are protected by a similar mechanism
as previously applied to ‘unlawful dismissals’, however the protections are now
more extensive because punitive or discriminatory treatment – ‘adverse action’
– is actionable, where the consequences of that treatment fall short of termination of employment. Adverse action is described, rather than defined, by a
table of examples in FW Act s 342. Essentially, adverse action by an employer
against an existing employee includes not only dismissal, but also injuring the
employee in their employment, altering their position to their detriment, or
discriminating against them in comparison with other employees. Adverse
action also applies to potential employees, and can be breached if an employer refuses to employ a person, or hires them on discriminatory terms. It also
applies to employees and unions. If an employee or industrial association takes
industrial action in breach of obligations under the Part, then the employee or
industrial association has also taken ‘adverse action’ and will be susceptible to
prosecution for the civil remedies set out in Part 4–1. Section 539 sets out a
table of penalties. Breach of the workplace rights provisions in Part 3–1 attracts
282
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
a fine of up to 60 penalty units (AUS$6,600) for individuals and up to 300
­penalty units for corporations (AUS$33,000).
The new system for asserting these workplace rights requires parties to
attempt to resolve disputes informally in the first instance. Employees who wish
to complain about adverse action must make an application to FWA (under s
365 if the employee has been dismissed, or under s 372 if not), and FWA will
hold a private conference to attempt to resolve the matter. The applicant cannot progress the matter to a court application until FWA has issued a certificate
under s 369 that all reasonable attempts to resolve the dispute have failed. How
these new processes operate in practice will be a matter of considerable interest
to employee and employer advocates working in this field.
Section 351 on ‘Discrimination’ is also likely to attract early attention, from
scholars if not from litigants. This provision prohibits an employer taking
adverse action against an employee on the usual discrimination grounds: race,
colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion,
national extract and social origin. The provision allows the usual exceptions
for action taken because of the inherent requirements of the job, and action by
religious institutions to avoid injury to the religious susceptibilities of adherents of the faith: s 351(2). Most interesting, however, is a new exception for any
action that is ‘not unlawful under any anti-discrimination law in force in the
place where the action is taken’: s 351(2)(a). Sub-section 351(3) lists the various
anti-discrimination statutes in each of the States as an ‘anti-discrimination law’
for the purposes of s 351(2)(a). This provision appears to import into the federal law all of the exceptions and limitations of state-based discrimination laws.
So if an employer would have had a defence under a State law (for example, on
the basis that a person, because of a disability, could not carry out the inherent
requirements of the particular job, or that in order to accommodate the person
it would impose unjustifiable hardship on the employer), they will also have a
defence under the FW Act. A question hangs over whether this exception also
implies that if certain discriminatory conduct is not prohibited in a State, it
will also not base a claim under FW Act s 351. For example, State laws in New
South Wales and South Australia do not prohibit discrimination on the ground
of religion (Eastman, 2009: 636). Does this mean that an employer discriminating on that ground in New South Wales or South Australia would be found
not to have breached the FW Act, but an employer in Victoria or Queensland
acting on the same basis would be liable? This new exception may prove inconvenient if it causes the many subtle variations in State anti-discrimination laws
to be incorporated into the national Fair Work framework.
Transfer of Business
One aspect of the FW Act to receive considerable critical attention (see
Creighton and Shi, 2009; Riley, 2009) is the new Part 2–8, Transfer of Business,
dealing with the transmission of award and agreement entitlements when a
283
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
business or part of a business changes hands. Striking an appropriate balance
between the new employer’s interest in operating efficiently and the transferring employees’ interests in maintaining wages and working conditions, has
been a particular challenge for industrial laws since the widespread introduction of enterprise bargaining (Sebbens, 2003). While industry-wide awards
applied generally to all employers in an industry sector, disputes over transmission of business were unusual, and often related to a demarcation dispute (see
for example Re Australian Industrial Relations Commission, Ex parte Australian
Transport Officers Federation [1990] 171 CLR 216). The emergence of enterprise bargaining, and the modern commercial practice of outsourcing, created
more disputes. The Work Choices laws decided the appropriate balance was
to allow transferring employees a 12-month window of protection for their pay
and conditions, after which they would need to negotiate new terms with the
new employer (see WR Act s 580). Also, under Work Choices, only transferring employees retained the benefit of a transmitting award or agreement (see
WR Act s 581). New recruits did not. This created a fear that the rules would
discourage the continued employment of existing employees.
The FW Act dispensed with the 12-month rule, and allows non-transferring employees to acquire the benefits of a transferring award or agreement,
so long as the new employer is not bound by any other agreement in respect
of those non-transferring employees: FW Act s 314. One of the main features
of the new provisions is that outsourcing will now be caught by the obligation
to maintain employees’ conditions. The High Court of Australia decision in
PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 201 CLR 648
has now been legislatively overruled. In that case, St George Bank closed a
bank branch, but entered into an arrangement with the pharmacy next door to
operate a branch agency. Bank tellers who had been employed by St George
continued to do the same work, dealing with deposits, withdrawals and loan
applications, but as employees of the pharmacist. The court held that there was
no transmission of business, because the legal character of the branch agency
business operated by the pharmacist was different from the business of the
bank. Banks earn profits from the arbitrage between borrowing and lending
rates. The branch agent earned profits from charging a fee for service on transactions. On this ‘business characterization’ test, the two businesses were not
the same, notwithstanding that substantially identical work was performed by
the employees. So the employees were not entitled to claim the continued
benefit of their old industrial instrument. FW Act s 311(5)(a) makes it clear
that an outsourcing arrangement like this would now be caught by the transfer
of business rules.
It is not so clear, however, whether the High Court decision in Minister for
Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR
194 (Gribbles), involving employees who were employed by successive contractors, would still hold under the new laws. Gribbles decided that employees who
worked for successive contractors providing radiology services to a medical
practice did not have the benefit of their old award, because the new contractor
284
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
acquired no assets from the old contractor. Although it used the same equipment and the same premises, these were leased from the medical practice. FW
Act s 311 provides that there will be a transfer if an employee moves from
the old to the new employer, and there is a ‘connection’ between the old and
new employer. That ‘connection’ may be established by the existence of an
‘arrangement’ between the two, by which one acquires ownership or ‘beneficial use’ of some or all of the assets used in the business by the old employer.
The meaning of ‘beneficial use’ in this context may well produce some litigation to test whether a Gribbles-like arrangement would now result in a transfer
of award or enterprise bargain conditions.
If employees transfer from one associated entity to another there will be
a transfer. This aspect of the new rules has attracted some concern from
employers contemplating their obligation under FW Act s 389(2) to redeploy
redundant employees in related entities. The concern is that a redeployment
will cause a transfer of an award or agreement from an ailing entity that may
be inappropriate to the position in the related entity. To some extent these
fears are allayed by the ability to make an application to Fair Work Australia to
exercise its wide discretion to determine whether instruments should transfer,
whether non-transferring employees should be covered by transferring industrial instruments and whether transferring instruments should be varied: see
FW Act ss 317–318.
State Developments
For State governments in 2009, the most pressing industrial law issue was the
Rudd Government’s proposal to bring all private sector employees within the
national Fair Work system. At the time of writing, the Western Australia government was the only state that had refused to enact referral legislation. As the
only non-Labor State, the government had vowed to protect small businesses
from the ‘pro-union’ Fair Work system (Workplace Express, 2009a). All of
the other states had introduced into Parliament, or passed, referral legislation that reflected intergovernmental and bilateral arrangements between the
federal government and each of the states. There are three essential elements
to the power that is referred by each State to the Commonwealth: first, to
extend the application of the FW Act to State private sector employers and
employees; second, to amend the legislation in relation to referred topics; and
third, to implement transitional arrangements for employers and employees
who ­transfer from a state system to the federal system.
The Victorian Parliament was the first to pass referral legislation. The Fair
Work (Commonwealth Powers) Act 2009 (Vic), enacted in June 2009, replaced
and expanded upon the Kennett government’s earlier referral of power under
the Commonwealth Powers (Industrial Relations) Act 1996 (Vic). The new referral
legislation also repealed two measures which had been introduced to combat
Work Choices: the Victorian Workers’ Wages Protection Act 2007 (Vic) and the
state unfair dismissal protections for public sector employees. These measures
285
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Journal of Industrial Relations 52(3)
were no longer necessary in light of the creation of similar wage protection
provisions at the federal level, and the reinstatement of unfair dismissal protections for employees of businesses with 100 employees or fewer under the FW
Act (Hulls, 2009).
The New South Wales government held out until November 2009 before
reaching a bilateral agreement with the federal government. This strategy paid
off, with the final arrangement providing a number of benefits to the State.
These included federal funding to support the dual appointment of seven
New South Wales Industrial Relations Commission members to Fair Work
Australia, and the designation of the Industrial Court of New South Wales as
a court eligible to determine claims under the FW Act (Workplace Express,
2009c).
For its part, the federal government has enacted the Fair Work (State
Referrals and Consequential and Other Legislation) Act 2009 (Cth) and the Fair
Work Amendment (State Referrals and Other Measures) Act 2009 (Cth) to implement the State referrals. The second of these statutes outlines various measures
to assist affected employers to shift from the State industrial relations systems
to the national system. This includes a 12-month grace period before modern
awards apply to these employers. Significantly, the Act also envisages an ongoing role for State industrial tribunals in the resolution of disputes. In particular,
State agreements may retain clauses that empower State industrial tribunals
(and private providers) to resolve disputes arising under those agreements.
Conclusion
Labor’s Fair Work Act promises to create a workplace relations system that
is easier to understand and apply, and which offers greater stability than its
recent predecessors. However, with the enactment of the TPCA Act in 2009,
it has become clear that these qualities may take some time to emerge, as the
parties become familiar with the new system and work through many layers of
transitional rules.
From the day it opened its doors on 1 July 2009, the ‘one stop shop’, FWA,
offered a transparent and efficient decision-making process and assisted the
parties to understand the changes. As the Fair Work system is rolled out in
full in 2010, the parties will be looking to FWA and the courts for clear interpretations of the new concepts in the legislation, such as those contained in
the ‘adverse action’ and transfer of business provisions. We can only hope that
these decisions will contribute to, and not detract from, certainty and ­simplicity
in the Fair Work system.
Acknowledgement
The authors would like to thank David Taft for research assistance.
286
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Sutherland & Riley: Industrial Legislation in 2009
References
Catanzariti, J. and Brown, S. (2010) ‘Major Tribunal Decisions in 2009’, Journal of Industrial
Relations 52(3): 289–303.
Chapman, A. (2009) ‘The Decline and Restoration of Unfair Dismissal Rights’, in A. Forsyth
and A. Stewart (eds) Fair Work: The New Workplace Laws and the Work Choices Legacy,
pp. 207–28. Sydney: Federation Press.
Creighton, B. and Shi, E. (2009) ‘The Transfer of Business Provisions of the Fair Work Act
in National and International Context’, Australian Journal of Labour Law 23(1): 39–59.
Eastman, K. (2009) ‘Anti-discrimination Law in the Workplace’, in C. Sappideen,
P. O’Grady and G. Warburton (eds) Macken’s Law of Employment, 6th edn, pp. 619–60.
Sydney: Lawbook.
Ewing, K. (2008) ‘Restoring Rights at Work: Lessons from the United Kingdom’, Monash
Roundtable, Melbourne, 10 November.
Fair Work Australia (FWA) (2009a) Application by Lutheran Church of Australia Queensland
District and Others [2009] FWA 975, 5 November.
Fair Work Australia (FWA) (2009b) Application by Domino’s Pizza Enterprises Limited [2009]
FWA 493, 13 November.
Fair Work Australia (FWA) (2009c) Hunter Water Corporation v APESMA [2009] FWA
1154, 25 November.
Gillard, J. (2009) Second Reading Speech to the Fair Work (Transitional Provisions and
Consequential Amendments) Bill 2009, Parliament of Australia, House of Representatives,
Hansard, 19 March.
House of Representatives (2008) Fair Work Bill: Explanatory Memorandum, Parliament of
Australia, November.
Hulls, R. (2009) Second Reading Speech to the Fair Work (Commonwealth Powers) Bill 2009,
Parliament of Victoria, Legislative Assembly, Hansard, 2 June.
Lawrence, J. (2009) ‘How the New IR System is Shaping Up for Employers and Unions’,
Speech to Workforce Conference, Melbourne, 21 September.
Nassios, T. (2009) Evidence to Estimates Hearing, Senate Committee on Education, Employment
and Workplace Relations, 21 October. Canberra: Parliament of Australia.
Riley, J. (2009) ‘Transfer of Business Under the Fair Work Act’, Commercial Law Quarterly
23(2): 15–22.
Sebbens, T. (2003) ‘“Wake, O Wake”: Transmission of Business Provisions in Outsourcing
and Privatisation’, Australian Journal of Labour Law 16(2): 1–39.
Stewart, A. (2005) ‘A Simple Plan for Reform?: The Problem of Complexity in Workplace
Regulation’, Australian Bulletin of Labour 31(3): 210–36.
Stewart, A. (2009) ‘A Question of Balance: Labor’s New Vision for Workplace Regulation’,
Australian Journal of Labour Law 22(1): 3–50.
Sutherland, C. (2009) ‘Industrial Legislation in 2008’, Journal of Industrial Relations 51(3):
297–311.
Williams, G. (2007) Working Together: An Inquiry into Options for a New National Industrial
Relations System, NSW Government, Sydney, November 2007.
Workplace Express (2009a) ‘WA Won’t Give Up IR Powers: Buswell’, 28 January.
Workplace Express (2009b) ‘IR Experts Ponder What’s to Come Under Fair Work Act’,
18 May.
Workplace Express (2009c) ‘NSW Referral Laws in Parliament Next Week’, 19
November.
287
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010
Downloaded from jir.sagepub.com at University of Sydney on July 26, 2010