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Workplace Relations Amendment (Small Business Employment Protection) Bill 2005

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2004-2005

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

 

 

 

 

WORKPLACE RELATIONS AMENDMENT

(SMALL BUSINESS EMPLOYMENT PROTECTION) BILL 2005

 

 

 

 

 

REVISED EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Employment and Workplace Relations, the Honourable Kevin Andrews MP)

 

 

 

 

THIS MEMORANDUM TAKES ACCOUNT OF THE AMENDMENT MADE BY THE

HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED.

 



WORKPLACE RELATIONS AMENDMENT
(SMALL BUSINESS EMPLOYMENT PROTECTION) BILL 2005

 

 

OUTLINE

 

The Bill would amend the Workplace Relations Act 1996 (WR Act) to protect small business employers from redundancy payments that would otherwise adversely impact on the capacity of small businesses to provide employment. 

 

On 26 March 2004, the Australian Industrial Relations Commission (the Commission) handed down a test case decision (PR032004) which determined that the exemption of businesses with fewer than 15 employees from redundancy pay obligations should be removed.  The Commission decided that the redundancy pay scale determined in 1984 for larger businesses should now apply to small businesses.  The scale ranges from four weeks’ pay after one year of service to eight weeks’ pay after four years of service.  On 8 June 2004, the Commission handed down a supplementary decision (PR062004), in which it decided that the redundancy pay scale applicable to small business should not take into account service rendered prior to the operative date of any order giving effect to the 26 March decision.  Prior service will be taken into account in the case of employees of employers having 15 or more employees.

 

The Australian Government opposes any attempt to impose redundancy pay obligations on employers who employ fewer than 15 employees.  To achieve this, the Bill would:

 

·          amend paragraph 89A(2)(m) of the WR Act to limit the allowability of redundancy pay to employers of 15 or more employees;

·          provide that any variations to awards, made after the 26 March 2004 redundancy test case decision and imposing redundancy pay obligations on employers who employ fewer than 15 employees, have no effect;

·          prevent the Commission from making an exceptional matters order about redundancy pay by an employer having fewer than 15 employees;

·          prevent the Commission from making redundancy pay orders under section 170FA of the WR Act against an employer of fewer than 15 employees;

·          exclude constitutional corporations which employ fewer than 15 employees from redundancy pay obligations which may be imposed by State laws, State awards or State authority orders.  However, the Bill will not remove redundancy pay obligations that were imposed by a State law, State award or a State authority order before 26 March 2004 unless those obligations were suppressed by a federal award on or before 26 March 2004;

·          override Territory laws to the extent that they would have the effect of imposing redundancy pay obligations on all employers in a Territory that employ fewer than 15 employees; and

·          ensure that to the maximum extent of Commonwealth power, small businesses respondent to a federal award that previously exempted small businesses from redundancy pay are not subject to new redundancy pay obligations as a result of the ‘springing-up’ of State or Territory laws, State awards or State authority orders.

 

FINANCIAL IMPACT STATEMENT

 

The measures in this Bill are budget neutral.



 

NOTES ON CLAUSES

 

Clause 1 - Short title

 

This is a formal provision specifying the short title of the Act.

 

Clause 2 - Commencement

 

This clause specifies that the Act would come into operation on the day on which it receives the Royal Assent.

 

Clause 3 - Schedule(s)

 

Clause 3 provides that an Act specified in a Schedule to this Act is amended or repealed as set out in the Schedule, and that any other item in a Schedule operates according to its terms.

 

 



Schedule 1 - Redundancy pay by small business employers

 

Workplace Relations Act 1996

 

Item 1 - Paragraph 89A(2)(m)

 

1.1         This item would amend the WR Act to replace existing paragraph 89A(2)(m).

 

1.2         Proposed paragraph 89A(2)(m) would make redundancy pay by an employer of 15 or more employees an allowable award matter.

 

1.3         This means that redundancy pay by an employer of fewer than 15 employees would not be an allowable award matter.

 

Item 2 - Subsection 89A(7)

 

1.4          This item would amend the WR Act to omit “Subsection (1)” from subsection 89A(7) and substitute it with “Subject to subsection (7A), subsection (1)”.

 

1.5         This amendment is consequential to item 3 which would insert proposed subsection 89A(7A).

 

Item 3 - After subsection 89A(7)

 

1.6         This item would insert proposed subsection 89A(7A) to the WR Act.

 

1.7         Proposed subsection 89A(7A) would have the effect that the Commission would not be able to make an exceptional matters order about redundancy pay by an employer of fewer than 15 employees.

 

Item 4 - After subsection 89A(8)

 

1.8         This item would insert proposed subsection 89A(8A) to the WR Act.

 

1.9         Proposed subsection 89A(8A) is an interpretative provision for proposed paragraph 89A(2)(m) and proposed subsection 89A(7A).

 

1.10       Proposed paragraph 89A(8A)(a) sets out the time - the relevant time - at which it is to be worked out whether a particular employer employs 15 or more employees or fewer than 15 employees for the purposes of paragraph 89A(2)(m) and subsection 89A(7A).

 

1.11       That time is either when notice of redundancy is given by the employer or by the employee who becomes redundant, or when the redundancy occurs, whichever happens first.  The reference to notice of redundancy being given by the employee refers to the situation where an employee elects to take voluntary redundancy and advises the employer of that fact. 

 

1.12       Proposed paragraph 89A(8A)(b) provides that a reference to employees in either proposed paragraph 89A(2)(m) or proposed subsection 89A(7A) includes a reference to the employee who becomes redundant and any other employee who becomes redundant at the relevant time.  A reference to employees also includes any casual employee who, at the relevant time, has been engaged by the employer on a regular and systematic basis for at least 12 months, but does not include any other casual employee. 

 

Item 5 -  After Part VI

 

New Part VIAA - State and Territory laws etc. about redundancy payments by small businesses

 

1.13       This item would amend the WR Act to insert new “Part VIAA - State and Territory laws etc. about redundancy payments by small businesses”.

 

New section 167 - Certain small businesses not bound by requirement to pay redundancy pay

 

1.14       Proposed section 167 provides that State laws, State awards, State authority orders and Territory laws will have no effect to the extent that they would require a relevant employer that employs fewer than 15 employees to pay redundancy pay.

 

1.15       Proposed subsection 167(1) provides that the section applies to a State law, a State award, a State authority order or a Territory law, each of which is an ‘eligible instrument’.

 

1.16       Proposed subsection 167(2) provides that if an eligible instrument would have the effect of requiring a relevant employer that employs fewer than 15 employees to pay redundancy pay, the eligible instrument does not have that effect.

 

1.17       Proposed paragraph 167(3)(a) sets out the time - the relevant time - at which it is to be worked out whether a relevant employer employs fewer than 15 employees for the purposes of proposed subsection 167(2).

 

1.18       That time is either when notice of redundancy is given by the employer or by the employee who becomes redundant, or when the redundancy occurs, whichever happens first.  The reference to notice of redundancy being given by the employee refers to the situation where an employee elects to take voluntary redundancy and advises the employer of that fact. 

 

1.19       Proposed paragraph 167(3)(b) provides that a reference to employees in proposed subsection 167(2) includes a reference to the employee who becomes redundant and any other employee who becomes redundant at the relevant time.  A reference to employees also includes any casual employee who, at the relevant time, has been engaged by the employer on a regular and systematic basis for at least 12 months, but does not include any other casual employee.

 

1.20     Proposed subsection 167(4) defines certain terms used in the section:

 

·                 ‘Relevant employer’ means:

(a)     in the case of a State law, a State award or a State authority order - a constitutional corporation;

(b)     in the case of a Territory law - any employer.

 

·                 ‘State authority order’ means an order made, or any other thing done, by a State industrial authority.  A State industrial authority is defined in subsection 4(1) of the WR Act as:

 

(c)     a board or court of conciliation or arbitration, or tribunal, body or persons, having authority under a State Act to exercise any power of conciliation or arbitration in relation to industrial disputes within the limits of the State;

(d)     a special board constituted under a State Act relating to factories; or

(e)     any other Stare board, court, tribunal, body or official prescribed for the purposes of the definition.

 

·                 ‘State law’ means a law of a State including any regulations or other instruments made under such a law but does not include a State employment agreement.

 

·                 ‘Territory law’ means a law of a Territory including any regulations or other instruments made under such a law.

 

Item 6 -  At the end of section 170FA

 

1.21       This item would amend section 170FA to include new subsections 170FA(3) and (4). 

 

1.22       Proposed subsection 170FA(3) provides that the Commission must not make an order to give effect to Article 12 of the Termination of Employment Convention in relation to the matter of redundancy pay by an employer of fewer than 15 employees. 

 

1.23       Proposed paragraph 170FA(4)(a) sets out the time - the relevant time - at which it is to be worked out whether an employer employs fewer than 15 employees for the purposes of subsection 170FA(3).

 

1.24       That time is either when notice of redundancy is given by the employer or by the employee who becomes redundant, or when the redundancy occurs, whichever happens first.  The reference to notice of redundancy being given by the employee refers to the situation where an employee elects to take voluntary redundancy and advises the employer of that fact. 

 

1.25       Proposed paragraph 170FA(4)(b) provides that a reference to employees in proposed subsection 170FA(3) includes a reference to the employee who becomes redundant and any other employee who becomes redundant at the same time.  A reference to employees also includes any casual employee who, at the relevant time, has been engaged by the employer on a regular and systematic basis for at least 12 months, but does not include any other casual employee.

 

Item 7 - Application

 

1.26       This item provides that the amendments contained in items 1 to 4 of this Schedule would apply where, after the Schedule commences, the Commission is:

 

·                 dealing with an industrial dispute by arbitration; and

·                 making an award or order about the prevention or settlement of an industrial dispute; and

·                 varying an award or order that would involve maintaining the settlement of an industrial dispute.

 

This item applies whether the industrial dispute arose before or after the commencement of the Schedule.

 

1.27       This item also provides that the amendment made by item 5 applies to:

 

·                 an eligible instrument, made after the commencement of this Schedule, that has the effect of requiring a relevant employer that employs fewer than 15 employees to pay redundancy pay; and

·                 an eligible instrument, made before or after the commencement of this Schedule, that is amended or varied after the commencement of this Schedule and has the effect of requiring a relevant employer that employs fewer than 15 employees to pay redundancy pay.

 

1.28       In addition, this item provides that the amendment made by item 6 to section 170FA would apply where the Commission is making orders after commencement of this Schedule.

 

Item 8 - Transitional - awards and orders of the Commission

 

1.29       This item provides that if, during the period from 26 March 2004 until this Schedule commences, the Commission made an award or order that had the effect of requiring an employer of fewer than 15 employees to pay redundancy pay, or the Commission varied an award or order that was made before or during that period to that effect, then from the commencement of this Schedule such an award or order ceases to have that effect.

 

1.30       This item sets out the time - the relevant time - at which it is to be worked out whether an employer employs fewer than 15 employees for the purpose of the transitional provisions.

 

1.31       That time is either when notice of redundancy is given by the employer or by the employee who becomes redundant, or when the redundancy occurs, whichever happens first.  The reference to notice of redundancy being given by the employee refers to the situation where an employee elects to take voluntary redundancy and advises the employer of that fact. 

 

1.32       This item also provides that a reference to employees in the transitional provision includes a reference to the employee who becomes redundant and any other employee who becomes redundant at the relevant time.  A reference to employees also includes any casual employee who, at the relevant time, has been engaged by the employer on a regular and systematic basis for at least 12 months, but does not include any other casual employee. 

 

Item 9 - Transitional - Eligible instruments

 

Item applies to eligible instruments with small business redundancy pay requirements just before commencement

 

1.33     Subitem 9(1) provides that item 9 will apply if, just before the commencement of Schedule 1, an ‘eligible instrument’ contained provisions requiring some or all relevant employers that employ fewer than 15 employees to pay redundancy pay.  The terms ‘eligible instrument’ and ‘relevant employer’ are defined in subitem 9(6).  An ‘eligible instrument’ is a State law, a State award, a State authority order or a Territory law.  A ‘relevant employer’ is, in the case of a State law, award or authority order, a constitutional corporation.  In the case of a Territory law, it is all employers. 

 

Eligible instruments that began to provide for small business redundancy pay between 26 March 2004 and commencement

 

1.34     Paragraph 9(2)(a) deals with a situation where an eligible instrument was made before 26 March 2004 and before that date did not contain provisions requiring the affected employers to pay redundancy pay but was varied on or after 26 March 2004 to include a provision requiring the affected employers to pay redundancy pay.  Paragraph 9(2)(a) will prevent that eligible instrument from having the effect of imposing redundancy pay obligations on the affected small business employers from the commencement of this Schedule.

 

1.35     Paragraph 9(2)(b) will prevent an eligible instrument made on or after 26 March 2004 having the effect of imposing redundancy pay obligations on relevant small business employers from the commencement of this Schedule.

 

Eligible instruments where Federal award suppressed a small business redundancy pay requirement that was present just before 26 March 2004

 

1.36     Subitem 9(3) deals with a situation where an eligible instrument was made before 26 March 2004 and has a provision requiring relevant small business employers to pay redundancy pay but was suppressed by a federal award because of inconsistency.  Subitem 9(3) will ensure that the eligible instrument would be prevented from ‘springing up’ to impose redundancy pay obligations on relevant small business employers once the inconsistency is removed and the federal award no longer contains a provision dealing with small business redundancy pay. 

 

Eligible instruments where certified agreement or AWA suppressed a small business redundancy pay requirement that was present just before 26 March 2004, and a Federal award would also have had that effect

 

1.37     Subitem 9(4) deals with a situation where a certified agreement or AWA to which a relevant small business employer is party ceases to have effect after the commencement of the Schedule, but the small business employer remains bound by a federal award.  Subitem 9(4) will ensure that when the agreement ceases to have effect, an eligible instrument that would otherwise have imposed a redundancy pay obligation will not impose that obligation. 

 

Eligible instruments where small business redundancy pay requirement was present just before 26 March 2004 and a future Federal award starts to apply

 

1.38       Subitem 9(5) deals with a situation where, before 26 March 2004, a relevant small business employer was covered by an eligible instrument (e.g. a State common rule award) containing provisions requiring the employer to pay redundancy pay, and, after commencement of the Schedule, the employer becomes bound by a federal award which applies in relation to some or all of the employees to whom the requirement to pay redundancy pay relates.  From the time at which the employer becomes bound by the federal award, the small business redundancy pay obligation in the eligible instrument will cease to have effect in relation to the relevant employees. 

 

Definitions

 

1.39       Subitem 9(6) defines the terms, ‘eligible instrument’, ‘Federal award’ and ‘relevant employer’.

 

Item 10 - Protection of existing entitlements

 

1.40       This item ensures that nothing in this Schedule or an amendment made by this Schedule would affect any entitlement to a redundancy payment that had arisen before the commencement of this Schedule.