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Fair Work Amendment (State Referrals and Other Measures) Bill 2009

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2008 - 2009

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

FAIR WORK AMENDMENT (STATE REFERRALS AND OTHER MEASURES) BILL 2009

 

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

Amendments to be Moved on Behalf of the Government

 

 

 

 

 

 

 

 

 

 

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



AMENDMENTS TO THE FAIR WORK AMENDMENT (STATE REFERRALS AND OTHER MEASURES) BILL 2009

OUTLINE

The Fair Work Amendment (State Referrals and Other Measures) Bill 2009 (the Bill) was introduced into the House of Representatives on 21 October 2009.  The Bill amends the Fair Work Act 2009 (the FW Act) to enable States to refer workplace relations matters to the Commonwealth for the purposes of paragraph 51(xxxvii) of the Constitution.

The Bill also amends the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the T&C Act) to establish arrangements for employees and employers transitioning from referring State systems to the national workplace relations system, and consequential amendments to other Commonwealth legislation required as a result of these arrangements.

Some amendments to be moved to the Bill would amend the T&C Act.  The proposed amendments would :

·           amend Schedules 5 and 6A to clarify that local government and State public sector employers and employees that are national system employers and employees because of a State referral can be covered by a modern award;

·           amend proposed subitem 16(5) of Schedule 4 to disapply for 12 months from the Division 2B referral commencement paragraph 121(1)(b) of the FW Act, with the effect that a Division 2B State reference employee of a small business may be entitled to redundancy pay under section 119 of the FW Act during that 12 month period;

·           amend proposed item 8 of new Schedule 3A to make clear that the Bill does not impose a duty on a State industrial body in relation to resolution of a dispute arising under a Division 2B State employment agreement;

·           preserve pay equity orders made by a State industrial body as transitional pay equity orders of Fair Work Australia (FWA) for Division 2B referral employees and existing federal system employees bound by a transitional award (but only for a specified class of employers and affected employees to whom a transitional award applies as prescribed by the regulations); and

·           extend the compliance and enforcement provisions that apply to Division 2B State instruments to any long service leave or transitional pay equity orders made by FWA. 

The amendments to be moved to the Bill that amend the FW Act would:

·           amend subsection 30B(1) of the FW Act so that it is expressed to operate in relation to a State that has referred to the Commonwealth matters relating to workplace relations before 1 July 2009;

·           insert a reference to the Industrial Court of New South Wales (which is currently prescribed as an eligible State or Territory court in the Fair Work Regulations 2009 ) into the definition of eligible State or Territory court in section 12 of the FW Act;

·           make technical changes to ensure that sections 423, 424 and 426 of the FW Act dealing with industrial action correctly refer to the definition of a referring State as contained in Divisions 2A and 2B of Part 1-3 of the FW Act; and

·           ensure that provisions relating to outworkers in Part 10A of the Workplace Relations Act 1996 (WR Act) (as continued by Schedule 5 to the T&C Act) are aligned with the corresponding provisions of the FW Act.

FINANCIAL IMPACT STATEMENT

The measures proposed in this Bill create additional workload for Fair Work Australia and the Fair Work Ombudsman in respect of South Australia and Tasmania.  The cost of this work will be absorbed within existing operational capacity.  The financial impact of the expansion of these measures to other States will be considered separately.

 

 



NOTES ON AMENDMENTS

1.             The following abbreviations are used in the Notes on Amendments:

AIRC

Australian Industrial Relations Commission

FW Act

Fair Work Act 2009

FW(RO) Act

Fair Work (Registered Organisations) Act 2009

FWA

Fair Work Australia

NES

National Employment Standards

NAPSA

notional agreement preserving State awards

first referral Act

Fair Work (State Referral and Consequential and Other Amendments) Act 2009

this Bill

Fair Work Amendment (State Referrals and Other Measures) Bill 2009

T&C Act

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

WR Act

Workplace Relations Act 1996

 

Amendment 1 - Clause 2, page 3 (table item 10, 1st column)

Amendment 2 - Clause 2, page 3 (table item 13, 1st column)

Amendment 3 - Clause 2, page 3 (after table item 13)

2.             These amendments would amend clause 2 to the Bill which sets out when this Bill’s provisions commence. 

3.             Amendment 1 would amend item 10 of the table to provide that items 1A to 128 of Schedule 2 commence the same day as item 39 of Schedule 1, that is, on a day to be fixed by Proclamation.

4.             Amendment 2 would amend item 13 of the table to provide that items 1A to 17 of Schedule 3 to this Bill commence on a day to be fixed by Proclamation.

5.             Amendment 3 would insert new item 13A into the table to provide that items 17A to 17E of Schedule 3 to this Bill (which relate to the WR Act award modernisation process) commence on Royal Assent.

Amendment 4 - Schedule 1, page 9 (after line 14), after item 27

6.             This amendment would amend subsection 30B(1) in Division 2A of the FW Act so that it is expressed to operate in relation to a State that has before 1 July 2009 referred to the Commonwealth matters relating to workplace relations (that is, the matters covered by subsections 30B(3), (4) and (5)).  Division 2A of the FW Act gave effect to Victoria's reference of workplace relations matters to the Commonwealth, which commenced on 23 June 2009.

7.             This is necessary for consistency with proposed subsection 30L(1) in new Division 2B, which would give effect to references from States during the period between 1 July 2009 and 1 January 2010.  This amendment is consistent with the amendment to be made to the heading of Division 2A by item 11 of Schedule 1 to this Bill, which makes clear that Division 2A is about States that refer matters before 1 July 2009.

Amendment 5 - Schedule 2, page 23 (before line 7), before item 1

Amendment 6 - Schedule 2, page 28 (after line 6), after item 36

8.             These items would insert new signpost definitions of affected employee and transitional pay equity order in item 2 of Schedule 2 to the T&C Act to cross-reference new definitions relevant to item 43 of Schedule 3, item 30A of new Schedule 3A and item 28 of Schedule 7 to the T&C Act.

Amendment 7 - Schedule 2, page 31 (after line 25), after item 53

9.             This amendment would insert new item 53A of Schedule 2 to this Bill, which would insert new Part 8 into Schedule 3 to the T&C Act.

10.         The item would apply to employers and employees who are currently covered by federal awards based on the conciliation and arbitration power kept in operation by Schedule 20 to the T&C Act (known as federal transitional awards) but who would, in the absence of a referral, come under the scope of State workplace relations regulation on 27 March 2011 when the award’s sunset date is reached.

11.         Subitem 43(1) would deem FWA to have made a transitional pay equity order on the Division 2B referral commencement in the same terms as a pay equity, work value or equal remuneration decision (however described) of a State industrial body made prior to 15 September 2009 that is prescribed in the regulations and provides for increases in the rates of pay payable to a particular class of employees (see subitem 43(4)).

12.         A transitional pay equity order deemed to have been made under this item would only apply to an employer prescribed by the regulations to whom a transitional award applied before the Division 2B referral commencement and to whom a modern award applies on or after the Division 2B referral commencement (see subitem 43(2)).  The transitional pay equity order would take effect immediately after the modern award starts to apply to the employer (subitem 43(7)).

13.         Subitem 43(3) would provide that an employer must not be prescribed by the regulations unless the source pay equity order would have applied to that employer had the transitional award not applied.

14.         Subitem 43(6) would provide that for the purposes of this item an affected employee would be an employee who performs work of a kind and at a classification level for which the source pay equity order determines a base rate of pay.

15.         Subitem 43(5) would provide that while a transitional pay equity order applies to an employer in relation to affected employees, the employer must pay those employees the higher of the base rate of pay that they would be entitled to under the transitional pay equity order and the base rate of pay they would be entitled to under the relevant modern award.  A transitional pay equity order would cease to have any effect once the applicable pay rate in the relevant modern award equals or exceeds the rate payable under the order (subitems 43(8) and 43(9)).

Amendment 8 - Schedule 2, item 54, page 40 (after line 30), after subitem 8(2)

16.         This amendment would amend item 8 of new Schedule 3A to the T&C Act (as to be inserted by item 54 of Schedule 2 to this Bill) in relation to dispute resolution under Division 2B State employment agreements. 

17.         Item 8 of new Schedule 3A has the effect that a Division 2B State employment agreement contains the same dispute resolution terms as were in the source State employment agreement immediately before the Division 2B referral commencement. 

18.         This amendment would apply in the case where the term provides for a dispute in relation to a matter arising under the agreement to be settled by a State industrial body.  The effect of this amendment would be to give the State industrial body the discretion to either settle, or decline to settle, a dispute arising under the Division 2B State employment agreement.  The amendment would make it clear that the provision does not impose a duty on a State industrial body to settle a dispute in relation to a matter arising under the Division 2B State employment agreement (which is a federal instrument). 

19.         The amendment would also enable FWA to settle a dispute in the event that the State industrial body declines to settle the dispute, or the State industrial body ceases to exist.

Amendment 9 - Schedule 2, item 54, page 54 (after line 2), after Division 1

20.         This amendment would amend item 54 of Schedule 2 to this Bill by inserting new Division 1A into new Schedule 3A to the T&C Act.

21.         New item 30A of Division 1A would preserve the operation of pay equity, work value or equal remuneration decisions (however described) of State industrial bodies made prior to 15 September 2009 that provide for increases in the base rates of pay payable to employees to whom a Division 2B State award applies.  Subitem 30A(1) will achieve this by deeming FWA to have made a transitional pay equity order in the same terms as the relevant source pay equity order on the Division 2B referral commencement. 

22.         Item 54 of Schedule 2 to this Bill would insert amendments to provide that Division 2B State awards will contain the same terms about rates of pay as the source State awards from which they are derived, which will already have been amended to take account of these orders (see subitems 3(2) and 3(3) of new Schedule 3A to the T&C Act).  As such, the transitional pay equity order would not take effect in relation to an employer until after those Division 2B State awards terminate (subitem 30A(5)).  In most cases this will be 12 months after the Division 2B referral commencement.

23.         Subitem 30A(2) would provide that a transitional pay equity order deemed to have been made under this item would only apply to an employer if a Division 2B State award that contained pay rates affected by the source pay equity order applied to the employer immediately before it terminated and the employer became covered by a modern award. The transitional pay equity order would only apply to the employer in relation to affected employees .

24.         An affected employee would be defined in subitem 30A(4) as either:

·           an employee employed by the employer and covered by the Division 2B State award as affected by the source pay equity order before it terminated; or

·           an employee employed by the employer after the Division 2B State award terminated but who would have been covered by the Division 2B State award as affected by the source pay equity order had they been employed at the termination time.

 

25.         Subitem 30A(3) would have the effect that while a transitional pay equity order applies to an employer in relation to affected employees, the employer must pay those employees the higher of the base rate of pay that they would be entitled to in accordance with the order if the Division 2B State award had not terminated and the base rate of pay they would be entitled to under the relevant modern award.  A transitional pay equity order would cease to have any effect once the applicable pay rate in the relevant modern award equals or exceeds the rate payable under the order (subitems 30A(6) and 30A(7)).

Amendment 10 - Schedule 2, item 56, page 73 (lines 13 to 18), omit subitem 16(5)

26.         This amendment would amend item 56 of Schedule 2 to this Bill to omit new subitem 16(5) of Schedule 4 of the T&C Act and to substitute a new provision.

27.         As with the previous subitem 16(5), the provision would continue to provide that in circumstances where a State industrial body could have made an order granting an employee an entitlement to redundancy pay if the employee had been made redundant prior to the Division 2B referral commencement, the terms and conditions of the employee are taken to have provided for an entitlement to redundancy pay under the NES. 

28.         As a result of this amendment, the new item would also create a temporary exception to paragraph 121(1)(b) of the FW Act, which exempts small business employers from making redundancy payments under section 119 of the FW Act.  The effect of the proposed amendment would be that a State reference employee may continue to be entitled to redundancy pay under the NES for a period of 12 months from the Division 2B referral commencement, even if his or her employer is a small business employer.

Amendment 11 - Schedule 2, page 81 (after line 3), after item 68

29.         This amendment would insert new item 68A into Schedule 2 to the Bill.

30.         Item 68A would amend the T&C Act by inserting a new Part 7 in Schedule 7 (new item 28) which sets out transitional provisions about the operation of the better off overall test for enterprise agreements if a transitional pay equity order applies.

31.         In relation to employees who are affected employees under new item 30A of Schedule 3A or new item 43 of Schedule 3, new item 68A would provide that for the purposes of determining whether an employee would be better off overall if an enterprise agreement, or an enterprise agreement as varied, applied to them than if the relevant modern award applied to them, the base rate of pay payable under the modern award is taken to be increased so that it is equal to the base rate of pay that the employee would be entitled to under the transitional pay equity order. 

32.         The effect of this amendment would be that the transitional pay equity order rate would be the base rate of pay used for the purpose of applying the better off overall test, unless the modern award rate was higher.

Amendment 12 - Schedule 2, page 92 (after line 28), after item 110

33.         This amendment would insert new item 110A in Schedule 2 to the Bill which in turn would insert new item 7A in Schedule 16 to the T&C Act.

34.         New item 7A would create civil remedy provisions for contraventions of the following orders:

·         a transitional pay equity order that applies to the person (subitem 7A(1)); and

·        an order by FWA under item 30 of new Schedule 3A to the T&C Act (to be inserted by item 54 of this Bill) that continues the effect of the terms of a Division 2B State award relating to long service leave (subitem 7A(2)).

Amendment 13 - Schedule 2, page 95 (before line 1), before item 117

35.         This amendment would insert new item 116A into Schedule 2 to this Bill.

36.         New item 116A would insert additional table items into item 16 of Schedule 16 of the T&C Act.  New table items 48A and 48B would set out the rules regarding standing, jurisdiction and maximum penalties in relation to the civil remedy provisions contained in new item 7A of the Bill.

Amendment 14- Schedule 3, page 100 (before line 4), before item 1

37.         This amendment would insert new item 1A into Schedule 3 to the Bill, to amend the definition of eligible State or Territory court in section 12 of the FW Act to include the Industrial Relations Court of New South Wales.

38.         The Industrial Relations Court of New South Wales is currently prescribed as an eligible State or Territory court in the Fair Work Regulations 2009 (regulation 1.05 of Part 1-2).

39.         This amendment would have no substantive effect on the scope of the definition.

Amendment 15 - Schedule 3, item 4, page 102 (lines 16 and 17)

Amendment 16 - Schedule 3, item 5, page 102 (lines 26 and 27)

Amendment 17 - Schedule 3, item 6, page 103 (lines 1 and 2)

40.         Items 4, 5 and 6 of Schedule 3 to the Bill amend sections 423, 424 and 426 of the FW Act to give State Ministers with portfolio responsibility for workplace relations standing to apply to suspend or terminate protected industrial action on specified grounds.  Although the new provisions refer to a referring State , the FW Act does not contain an overarching definition of referring State .

41.         These amendments would make technical changes to items 4, 5 and 6 of Schedule 3 to the Bill to replace references to a referring State with references to a State that is a referring State as defined in section 30B or 30L. 

42.         The amendments would ensure that Part 3-3 of the FW Act correctly refers to the definitions of a referring State as contained in Divisions 2A and 2B of the FW Act.

The WR Act award modernisation process

Amendment 18 - Schedule 3, Part 1, page 105 (after line 23), at the end of the Part

Amendment 19- Schedule 3, Part 1, page 105, after proposed item 17A

43.         These amendments would insert new items 17A, 17B, 17C, 17D and 17E in Schedule 3 to the Bill which would amend Schedule 5 and Schedule 6A to the T&C Act.

44.         Schedule 5 to the T&C Act commenced on 1 July 2009.  Schedule 5 provides for the continuation of the award modernisation process and preserves Part 10A of the WR Act for this purpose.

45.         Schedule 6 to the T&C Act sets out a process for the replacement of enterprise instruments by modern enterprise awards, and Schedule 6A to the T&C Act sets out a process for the replacement of State reference public sector transitional awards (SRPSTAs) by State reference public sector modern awards (SRPSMAs).

Modern awards - employers and employees

46.         Issues have arisen during the award modernisation process under Part 10A of the WR Act about whether State public sector and local government employers (either constitutional corporations or those covered by a State reference) and their employees should be able to be covered by a modern award.

47.         In its Statement on Stage 4 modern awards of 25 September 2009 ([2009] AIRCFB 865) the Full Bench of the AIRC said (in relation to local government) that the award modernisation process under Part 10A of the WR Act only applies in relation to constitutional corporations.

48.         The general intention in this area is that State public sector and local government employers, their employees and relevant organisations should be able to covered by a modern award, or (if the relevant prerequisites in Schedules 6 or 6A are met) a modern enterprise award or a SRPSMA.

49.         In Schedule 5 the terms employee and employer mean national system employee and national system employer respectively (item 1).  Regulation 5.10 of Part 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (the T&C Regulations) modified Part 10A of the WR Act with effect from 1 July 2009 so that references to employees and employers in that Part are also taken to be references to national system employers and national system employees.

50.         National system employer is defined in section 14 of the Fair Work Act 2009 (FW Act). This definition includes constitutional corporations, and was extended by section 30D of the FW Act to encompass employers (including unincorporated, public sector and local government employers) and employees within the scope of Victoria’s reference of workplace relations matters to the Commonwealth under the Fair Work (Commonwealth Powers) Act 2009 (Vic).

51.         For clarity, proposed item 17A would insert new subitems 2(3A)(a) and (b) of Schedule 5 to make similar provision to regulation 5.10 of the T&C Regulations on the face of the T&C Act. 

52.         New subitems 2(3A)(a) and (b) of Schedule 5 would provide that Part 10A of the WR Act applies as if a reference to an employee and an employer in that Part is taken to be a reference to (respectively) a national system employee and a national system employer.

53.         This would clarify that a modern award made under Part 10A of the WR Act can cover national system employers and employees, including those who only fall within the definitions of these terms because of a State reference (such as unincorporated employers and Victorian public sector and local government public sector employers, and their employees).

Modern awards - outworkers

54.         New paragraphs 17A(3A)(c)-(j) would replace a number of WR Act definitions relating to outworkers.  Definitions in Part 10A of the WR Act of ‘outworker’, ‘outworker term’ and ‘eligible entity’ have a narrower scope than equivalent definitions of ‘outworker’, ‘outworker term’ and ‘outworker entity’ in the FW Act.  These subitems would ensure that provisions relating to outworkers in Part 10A of the WR Act are aligned with the corresponding provisions of the FW Act.  This will ensure that the AIRC can make modern awards of the same scope as is contemplated by the FW Act.

Termination of SRPSTAs

55.         A modern award is to be expressed not to cover employees covered by an enterprise instrument, a SRPSTA or a SRPSMA.  These requirements are reflected in:

·           clauses 2(e) and 4D of the Minister’s award modernisation request in relation to modern awards made under Part 10A of the WR Act, and

·           subsections 143(8) and (10) of the FW Act (which commence on 1 January 2010) in relation to modern awards made by FWA under Part 2-3 of the FW Act.

56.         However, parties covered by an enterprise instrument or a SRPSTA can apply to FWA to terminate their transitional instruments and would be within the scope of a modern award if and when these instruments are terminated.

·           An enterprise instrument can be terminated under item 5 of Schedule 6 to the T&C Act on application to FWA by a person covered by the instrument.  A SRPSTA can be terminated under item 5 of Schedule 6A to the T&C Act on application to FWA by an employer or organisation covered by the instrument.

·           In either case FWA may terminate the instrument with effect from a specified date but not before 1 January 2010 (subitem 5(5) of Schedule 6 and subitem 5(5) of Schedule 6A).

57.         Under subitem 5(3) of Schedule 6A to the T&C Act FWA cannot terminate a SRPSTA unless satisfied that employees covered by the SRPSTA will, if the instrument is terminated, be covered by a modern award (other than the miscellaneous modern award) that is in operation and is appropriate for them.

58.         New items 17B and 17D would amend subitems 5(1), 5(3), 5(4) and 5(5) of Schedule 6A to the T&C Act to enable the AIRC (as well as FWA) to terminate a SRPSTA.  This would enable issues about coverage of modern awards to be settled by the AIRC as it completes the award modernisation process under Part 10A of the WR Act.

59.         New item 17C would amend subitem 5(3) of Schedule 6A to the T&C Act so that the AIRC or FWA could not terminate a SRPSTA unless satisfied that the employees covered by the SRPSTA will, if the SRPSTA is terminated, be covered by a modern award that, at the time of the termination, is or is likely to be in operation and that is appropriate for them.  This would ensure that although modern awards do not commence before 1 January 2010, an order terminating a SRPSTA would be able to be made before that time so as to provide certainty about which instrument will cover the parties at that point.  In accordance with existing subitem 5(5) of Schedule 6A, such an order could not operate before 1 January 2010.

60.         The AIRC will cease to exist on 31 December 2009 (item 1 of the table in subitem 7(1) of Schedule 18 to the T&C Act).   New item 17E would insert a new subitem 5(6) which provides that an AIRC order to terminate a SRPSTA is taken, after the AIRC has ceased to exist, to have been made by FWA.

61.         These amendments will commence on Royal Assent.