States refer their workplace relations powers and miscellaneous modern awards

States refer their workplace relations powers to the Commonwealth

By Nicholas Linke of Gadens Lawyers, Adelaide, John-Anthony Hodgens of Gadens Lawyers, Brisbane and Michael Cooper of Gadens Lawyers, Sydney

With the impending commencement of the remaining provisions of the Fair Work Act 2009 (Cth) (FW Act), and following the push for a single national workplace relations system, the Commonwealth and a number of States have introduced legislation to facilitate the uniform application of the FW Act to employers who would not otherwise be covered by the FW Act.

In this special update, we provide an overview of the legislation which has been passed in New South Wales, Queensland, South Australia, Victoria and Tasmania (Referring States) to refer the majority of their power to legislate on industrial relations to the Commonwealth.

In relation to the other States and Territories:

• Western Australia has not at this stage referred its workplace relations powers to the Commonwealth, however constitutional corporations in Western Australia will continue to be bound by the FW Act
• the Australian Capital Territory and the Northern Territory are already bound by the FW Act.

The Referring States' legislation

The legislation that has been passed by each of the Referring States is in very similar terms. The effect of the legislation that has been passed by each of the Referring States is that, in general, the FW Act will apply to all employees in the Referring States with the exception of certain groups of people. In general those employees who will not "transfer" into the Federal system are politicians and those employed in the public sector, judiciary, law enforcement and local government (other than Victoria). Accordingly, from 1 January 2010 an employer within the federal system does not have to be a constitutional corporation. They can be, for example, partnerships and sole traders as well as companies.

The legislation that has been passed by each of the Referring States also allows the Referring States to revoke the referral of their industrial relations powers in certain circumstances in the future, that is to reverse the effect of this legislation such that the affected employees would be once again subject to a State system. This may occur if the FW Act is amended in a manner inconsistent with industrial relations principles set out in the Referring States' legislation and an inter-governmental agreement. An example of this would be the re-introduction of individual statutory agreements. Please contact a member of the gadens lawyers' workplace relation team if you would like further information.

Transitional arrangements

The legislation passed by each of the Referring States also implements transitional arrangements for employers and employees moving from the Referring State's system to the Commonwealth system. These arrangements include:

• the preservation of State awards and agreements as federal instruments in the same terms as the State instrument, operating on a no detriment basis, generally in accordance with the National Employment Standards and the federal minimum wage
• the preservation of State awards as federal instruments will continue for a period of 12 months. After this time, the relevant federal award will apply
• the continuing operation of State agreements as federal instruments until they are terminated or replaced by an enterprise agreement made under the FW Act.

Other legislation

The referral of powers by the Referring States to the Commonwealth generally does not impact on other employment legislation in place in each of the Referring States dealing with matters such as:

• discrimination
• workers' compensation
• occupational health and safety, although the harmonisation process is continuing
• training arrangements such as traineeships and apprenticeships.

However, various pieces of legislation in each of the Referring States have been amended to accommodate the referral.

Getting ready for the Referral

Transferring employers will need to ensure that their present arrangements with their employees comply with the FW Act. In many cases it will be necessary to update common law contracts of employment. A failure to do so could result, in the worst case, in prosecution and the imposition of penalties.

Other than the minimum terms and conditions of employment, significant differences between State and Federal systems which employers new to the federal scheme should become familiar with are:

• adverse action claims - accessible by employees, prospective employees and contractors
• unfair dismissals – the exemptions are different (one of which is for genuine redundancies), there is no concept of a probationary period (it's a six month "minimum employment period" or 12 months for "small businesses"), and small businesses have more leniency (see the Small Business Fair Dismissal Code)
• agreement making – the requirement to bargain in good faith, employees can apply to bargain and seek orders to this effect, the test for approval is "better off overall"
• transfer (transmissions) of business
• union rights of entry
• sham contracting provisions
• record-keeping requirements.

Please contact a member of the gadens lawyers' workplace relation team if you would like assistance in preparing for the referral of industrial relations powers to the Commonwealth.

The Miscellaneous Modern Award

By Kathryn Dent of Gadens Lawyers, Sydney

As part of the fourth stage of the award modernisation process recently completed by the Australian Industrial Relations Commission (AIRC), the Miscellaneous Modern Award 2010 (Award) has been released. This is the much-anticipated "catch all" award.

The award modernisation request issued to the AIRC by Julia Gillard as Workplace Relations Minister relevantly foreshadowed that modern awards may cover new industries or new occupations where the work is similar to work that has historically been performed subject to awards (including State awards). However, this request also made it clear, consistent with the legislation, that modern awards are not intended to cover managerial or high-income employees or increase costs for employers. Accordingly, when publishing the Award the AIRC drew attention to clause 4.2 of the Award, part of the coverage provisions, which was included to address concerns raised during the consultation process that the exposure draft was too broad in its coverage and therefore possibly in conflict with the Minister's request and the legislation.

Clause 4.2 of the Award states that it does not cover:

Also excluded from the Award's coverage are employees covered by:

• another modern award
• those in an industry covered by a modern award but for whom there is no award classification
• a modern enterprise award
• a State public sector award.

Those therefore covered by the Award include:

• employees in classifications set out in the Award that are not very specific (there are four levels based on length of service and trade qualifications)
• (specifically and unless there is a more appropriate modern award) labour hire employees in the classifications set out in the Award
• (specifically) employers providing group training services for apprentices and trainees under the Award
• (specifically) apprentices and trainees engaged by a group training service hosted by a company to perform work at a location where activities covered by the Award are performed.

What should employers do?

As we have previously recommended all employers should now have identified what modern awards apply to their employees when they commence operation on 1 January 2010. This will generally have been done by reference to the employer's industry (for example Banking, Finance and Insurance) or by occupation (for example Architects and Clerks).

Where you have a "non award" employee you should check whether the Award exempts those employees for reasons set out above. Most commonly this will be if you are an employer in an industry covered by an Award and that other modern award does not have a classification for these employees or specifically excludes them. In these instances, the Award will not cover those employees. That is, these employees will continue to be "award free" but obviously still entitled to minimum terms and conditions as set out in the National Employment Standards.