3.1
This chapter explores the extent of support for the main provisions of the bill and examines specific concerns raised by participants during the inquiry.
General views on the bill
3.2
There was significant business and industry support for the policy intent of the bill, which aims to assist Australia's recovery from the COVID-19 pandemic, support productivity, jobs and growth, and ensure that employees receive their share of the benefits that flow from economic recovery. Given these entities either make (or represent those who make) decisions to hire employees and pay higher wages, this significant support is important.
3.3
The Business Council of Australia (BCA) spoke of the desire of businesses, all sides of politics, unions and the community for a modern industrial relations system that was:
…fair, easily understood, delivers secure work, creates more jobs, pays higher wages and puts in place strong sanctions for deliberate wrongdoing.
3.4
The BCA argued that the bill would achieve this by delivering 'a simpler and more modern system' and putting in place reforms that 'go to the heart of Australia's capacity to urgently replace jobs, urgently create jobs and put in place the conditions for higher wages over the next decade'.
3.5
The Australian Chamber of Commerce and Industry (ACCI) supported the need for change and pointed to the problems with Australia's industrial relations system that had been revealed by the COVID-19 pandemic.
It asserted that the measures in the bill:
…should help employers create and retain jobs and get back into bargaining to provide a foundation for wage increases and more secure enterprises and employment.
3.6
Programmed Skilled Workforce also emphasised the need for change in order to support employment and economic growth. It described the proposed reforms as 'a practical approach to simplifying Australia's complex industrial relations system' and contended that:
The proposed amendments will benefit the Australian economy and encourage jobs growth. If Australia is to innovate and grow we must provide flexibility, clarity and certainty to both employers and employees. The bill before the Parliament helps achieve these outcomes.
3.7
The Australian Mines and Metals Association (AMMA) supported this view and observed that the balanced amendments within the bill would 'reduce compliance costs, risk, red tape, and administrative burden'. In turn, this would help to support growth and jobs in the wake of the COVID-19 pandemic. Master Grocers Australia expressed similar views and argued that the proposed reforms would:
…have a significant effect on employment growth and economic recovery following the damaging effects of the last year. These reforms would be far reaching and would stimulate economic growth into the future.
3.8
While some stakeholders wanted certain provisions amended before the bill was passed, others highlighted the balance achieved by the bill and supported its passage without change. For example, the ACCI described the bill as 'deliberately moderate, balancing the needs of both employers and employees', while the AMMA reflected that:
This is a well-balanced package of improvements to Australia's IR framework, with some measures that may be seen as favourable to trade unions, and others to employers. More importantly, as a whole these amendments are highly favourable to the national interest and will support employers and employees as we collectively seek to repair the damage to our economy.
3.9
This view was shared by the Recruitment, Consulting and Staffing Association (RCSA):
…while RCSA may not support every element of this package, it is a suite of measures that, on balance, contains measures that are imperative to support jobs growth and economic recovery. It is for that reason we are strongly advocating its passage through the parliament.
3.10
The bill drew mixed reactions from employee organisations and other stakeholders. Some called for the bill to be rejected in its entirety, including those measures that received more general support, such as the enhanced framework for safeguarding employee entitlements and the sunsetting of historic industrial relations instruments. Others opposed specific provisions only, or suggested amendments for consideration. The aspects of the bill that drew the most commentary included those related to casual employment arrangements, changes to enterprise bargaining—in particular the better off overall test (BOOT)—and the proposed changes to greenfields agreements.
3.11
In response to some of these concerns, the Attorney-General's Department (the department) noted that a number of misconceptions about the bill had been raised, both in submissions to the inquiry and in evidence given during public hearings. Further, the department argued that the bill contained 'balanced, measured and essential' reforms that would resolve identified issues with the industrial relations system. The department also pointed to the highly consultative process undertaken to develop the bill:
Approximately 33 official meetings were held, with over 120 hours of discussions as well as many hours of informal talks, preparations and side meetings ... Discussions were supported by data and evidence submitted by working group members, the Attorney-General’s Department, external experts and submissions from external stakeholders. As part of the working group process, 44 external experts with a diversity of experience and knowledge presented their viewpoints including academics, legal experts and economists, and employers and employees …
3.12
A number of submitters acknowledged that the outcome of this consultation process represented a compromise. For example, the BCA stated that:
The Bill represents a sensible, middle ground that reflects the realities of modern workers and modern workplaces. It is neither revolutionary, nor extreme. It is the product of a detailed consultation process involving the government, business and unions that ran from June to October 2020.
3.13
Similarly, the Minerals Council of Australia recognised that 'both employers and employees had given a number of concessions to ensure support for this bill'. Further, it argued that the bill represented:
…a reasonable compromise in an area of policy in which agreement is not always easy to find. By providing additional flexibility … the bill will help to ensure Australia remains a competitive destination for mining investment, driving job creation at a time when the nation needs it most.
3.14
A number of submitters, including the National Farmers Federation (NFF) and RCSA, who raised concerns or recommended changes to the bill did not object to its passage. Other stakeholders, such as the Franchise Council of Australia and the Australian Public Transport Industrial Association, were unequivocal in recommending the Senate pass the bill. This view was shared by
Business SA, which told the committee:
There are a number of key changes within the omnibus bill that we believe will assist in the economic recovery and therefore assist businesses, their employees and the country as a whole. … We urge the Senate to ensure the passage of this bill through parliament …
Comment on specific aspects of the bill
Statutory definition of a casual employee
3.15
The bill would introduce a statutory definition of a 'casual employee'. The definition would incorporate the key common law principle that a casual employee has no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
3.16
While there was a range of views about the proposed amendment, the need for a clear definition was supported by a number of stakeholders. For example, Professor Andrew Stewart and colleagues observed that it was:
…clearly preferable to enact a transparent statutory definition so that employers understand their obligations and employees know their rights at the time they enter into arrangements, rather than waiting for decisions of courts often months or years after disputes arise.
3.17
This view was supported by the National Road Transport Association, which described a similar need for certainty:
Currently, the definition of a casual employee is in contention because there is no statutory definition of a casual employee and the common law has shaped this area of the law, leaving a trail of complexity and uncertainty that is crying out for reform.
3.18
Mr Wes Lambert, Chief Executive Officer, Restaurant and Catering Australia, also spoke about the importance of certainty to the restaurant industry, which was impacted badly by the COVID-19 pandemic:
[Businesses] need surety around the definition of a casual. They need to know if they are going to continue operating ... this is front of mind for them. It is … important that we as a nation come to a definition of 'casual', and the omnibus bill certainly sets us in the right direction to do that.
3.19
Despite this support, some employer groups indicated they would have preferred a definition of casual employee more closely aligned with the existing common award definition—that is, 'one who is engaged and paid as such'.
3.20
However, other employer groups viewed the proposed definition as a practical compromise. For example, Master Builders Australia stated that while it would have preferred the common award definition, it supported the proposed definition 'on the basis it will bring certainty and confidence to workplaces'.
3.21
Similarly, the Franchise Council of Australia considered that:
…whilst there are far simpler and less complex definitions … than those proposed in the Recovery Bill, that definition and its related provisions are sensible and practical, and they give clarity and certainty.
3.22
While the proposed definition was broadly supported by employer and business groups, some employee organisations raised concerns about its potential impact. For example, some stakeholders cautioned that the definition was overly reliant on the formal offer of employment, which was made at a time when employees were unable to judge whether their working conditions matched those set out in the offer. The Australian Services Union also raised concerns this reliance would subvert common law recognition that the nature of work can, over time, develop into something more permanent. It submitted that:
…if the Bill were made law, employees would only be able to challenge their casual status by reference to the employer’s commitments to them at the time the offer of employment was made.
3.23
This view was shared by other employee organisations, which expressed concerns that the criteria for judging whether an employee was casual were too limited. For example, Mr Michael Clifford, General Secretary, Queensland Council of Unions argued that the definition essentially meant that 'if you are called a casual, you are a casual'.
3.24
However, this interpretation was directly rejected by the department, which commented that 'the statutory definition makes clear it is not just enough to simply describe an employee as 'casual''. It also noted that the proposed definition:
…includes what Courts have described as the 'essence of casualness' in that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
3.25
This view was supported by the BCA, which observed that the bill would remove the ability of employers to deem workers as casual simply because they said they were:
The definition in the Bill is an objective test. The Bill sets out various factors that will comprise the test, such as whether the employee works 'regular hours' and has a 'firm advance commitment' to ongoing work.
Because it is an objective test, it will not be possible for an employer to simply assert that an employee is a 'casual' if they do not meet the test.
3.26
Some organisations also pointed to the parallel introduction of stronger casual conversion provisions as an appropriate avenue for addressing situations where the nature of a casual worker's employment evolved over time:
While employee representatives might argue that the definition … ignores the fact that casual employment can naturally evolve into permanent arrangements … this issue is addressed clearly by the casual conversion provisions contained in the IR Reform Bill.
3.27
In addition, the department noted that it remained open to employees who believed their employment had been mischaracterised as casual to apply to have their legal status determined by a court, which has been the remedy available since before, and as part of, the introduction of the Fair Work Act 2009 (Fair Work Act) in 2009.
Conversion from casual to full-time or part-time employment
The need for stronger casual conversion provisions
3.28
There were mixed views and a variety of competing evidence provided in regards to the proposed casual conversion provisions.
3.29
A small number of organisations questioned the need for stronger conversion provisions, given the low uptake of existing conversion arrangements by casual employees. According to some employer groups, this low uptake reflected the preference of employees for the flexibility and monetary loading associated with casual employment. This argument was supported by a survey of Business SA members, which found that many employees elected to remain casual, even when offered the opportunity to convert:
In fact, for two thirds of employers, only a third or less of their staff accepted casual conversion while for nearly half the employers, it was less than 10 per cent of employees.
3.30
However, in contrast to these findings, a United Workers Union (UWU) survey of hospitality workers concluded that more than three quarters of hospitality workers wanted a permanent job and (post-pandemic) more than half said permanency was extremely important to them. More broadly, the UWU argued that about half of all casuals would prefer permanent employment, based on the contents of a paper prepared by the Australian Council of Trade Unions (ACTU).
3.31
Per Capita also disputed the view that casual employment was a preference for many employees. While it acknowledged a genuine need for extended casual contracts in certain businesses/industries, Per Capita also asserted that:
…the idea that workers performing the same job for the same hours for
12 months or more may prefer casual contracts to permanent employment that includes leave entitlements is a myth…
3.32
In relation to the low uptake of existing conversion rights, a number of stakeholders pointed to difficulties faced by some employees when negotiating with their employers. These included the fear of negative consequences and/or the loss of work. The potential for adverse treatment was also recognised by the department, which suggested that a lack of awareness about conversion rights may also contribute to low uptake rates.
3.33
In advocating for the new provisions, the department drew attention to the lack of a universal mechanism to help employees convert their employment status. It noted that seven modern awards, including the Black Coal Mining Industry Award 2010, do not currently contain casual conversion clauses. In addition, it explained that casual conversion rights do not currently extend to award/agreement free employees or those employed under enterprise agreements without casual conversion provisions. The department's analysis showed that these types of agreements accounted for around two-thirds of existing enterprise agreements.
3.34
To this end, the department argued the new provisions would enhance the pathway to permanent employment by enshrining universal access to casual conversion entitlements in legislation.
Operation of the new casual conversion provisions
3.35
Overall, there was broad support for the concept of casual conversion.
For example, Master Grocers Australia noted that 'job security should be an essential aspect of employment' and argued that the new provisions would:
…provide employers and employees with a clear understanding of their respective positions in determining the process for casual conversion and providing for mutual beneficial outcomes.
3.36
The importance of the proposed changes was also acknowledged by the National Road Transport Association:
…NatRoad considers that the changes proposed in this subject area are important and urgent. Their passage should be a priority.
3.37
While supportive of the concept, some organisations raised concerns with the way the provisions would operate in practice. Three of the more commonly cited issues were the strength of casual conversion entitlements, employee access to arbitration, and the potential administrative burden on employers.
The strength of casual conversion entitlements
3.38
A number of organisations suggested that that the new provisions would weaken employee entitlements by allowing employers to deny conversion on the basis of insufficiently defined 'reasonable grounds'. Per Capita argued that:
…the provision rests on an ill-defined justification of ‘reasonable grounds’ by which employers would be exempt from making the offer. There is insufficient detail provided … as to what such ‘reasonable grounds’ might be, meaning that it is impossible to assess whether the grounds … would be considered reasonable by the employee or by an average member of the Australian community.
3.39
However, this interpretation was not supported by the department which observed that there was currently no universally applicable mechanism to assist casual employees to change their employment status and that the bill introduced such a mechanism. The department also argued that the statutory obligation on employers to instigate the conversion process would 'significantly strengthen' casual conversion entitlements. This view was shared by Mr Paul Moss, Principal Workplace Relations Advocate, Chamber of Commerce and Industry WA (CCIWA), who stated:
…with respect to casual employees, the bill is enshrining casual conversion provisions into legislation. ... There are a number of things in the bill here which aim to support and strengthen workers' entitlements.
3.40
The department also observed that refusing a request for conversion—or not offering conversion—on the basis of reasonable grounds was consistent with the existing Fair Work Commission (FWC) model clause for casual conversion. In doing so, it pointed to the reasoning that underpinned the development of the model clause:
…it would be unreasonable to require the employer to convert an employee in circumstances where it would require a significant adjustment to the casual employee’s hours … or it is known or reasonably foreseeable that the casual employee’s position will cease to exist or their hours of work will significantly change or be reduced in the next 12 months.
3.41
Some submitters also questioned whether employers would be able to avoid their obligation to offer casual conversion simply by varying their employees' work patterns and hours.
3.42
In response, the department pointed to the strong protections in the bill that would prevent employers varying or reducing an employee's work pattern or terminating their employment in order to avoid conversion obligations. These protections were also recognised by the BCA which highlighted the strong safeguards against abuse in the bill and noted that:
This is a civil penalty provision that will be subject to the higher civil penalties that are also included in the Bill.
Employee access to arbitration
3.43
The proposed dispute resolution process would largely mirror existing procedures in modern awards and enterprise agreements. Initially, disputes would need to be addressed at the workplace level. The FWC would then able to assist through mediation and conciliation. If this failed, FWC arbitration would be possible with the agreement of both parties. This process would be consistent with how disputes are broadly dealt with at present since the introduction of the Fair Work Act in 2009.
3.44
Many employee organisations raised concerns about the inability of the FWC to arbitrate disputes without the employer's agreement. For example, the ACTU argued that employers could avoid their obligations by declining to allow the FWC to make a binding determination. Professionals Australia concurred and suggested there would be little incentive for employers to resolve disputes at the workplace level.
3.45
However, the Australian Industry Group (AiG) observed that the few disputes which had arisen over previous casual conversion requests were able to be resolved through FWC conciliation. The AiG also pointed out that the FWC itself, when considering the same issue, had found no evidence that the existing processes were ineffective:
In the Casual Employment and Part-time Employment Case, the FWC Full Bench rejected union arguments that the casual conversion provisions in awards, including the employer’s right of reasonable refusal and the absence of compulsory arbitration, were ineffective.
3.46
Ms Estha van der Linden, Senior Policy Adviser, Business SA, also commented on the effectiveness of the proposed process:
Those … are the same provisions … contained in the model clauses in the Fair Work Act which came about from a Fair Work Commission decision, a full-bench commission decision. And as far as we're aware there haven't been any issues around the arbitration process for casual employees.
3.47
Further, Mr Tom Reid, Head of Policy and Public Affairs, AMMA, argued against the idea that the provisions would act as a disincentive to resolve disputes:
…if an employer were to refuse that right at 12 months or on an ongoing basis … they're just opening themselves up for massive damage claims in the veil of the Skene and Rossato decisions. So this bill … has a very balanced package that would, for the first year of employment, protect employers if the employment arrangement does tend to shift to something more permanent. But, beyond the 12 months, if an employer refuses and continues that practice, they're opening themselves up to big costs.
Potential administrative burden on employers
3.48
Several industry and employer groups argued that the provisions would impose an additional administrative burden on employers. Concerns generally centred on the requirement for employers to offer conversion (as opposed to the current employee right to request conversion) and to advise employees of a decision not to make an offer, even when an employee is not interested in conversion. For example, the ACCI argued:
This … requires an employer to consider the relevant factors regarding whether an employee has met the eligibility criteria, determine whether they are required to make an offer of casual conversion, and give a written notice to the employee … thereby subjecting employers to potentially unnecessary regulatory burden in relation to casual employees who have no interest in converting.
3.49
A number of submitters called for removal of the requirement for employers to offer casual conversion to eligible employees and suggested the onus should remain on employees to request conversion.
3.50
Others suggested the burden could be reduced by removing the obligation to provide advice to employees who do not meet the criteria for conversion.
In supporting this change, the BCA asserted that the requirement:
…applies an additional and unnecessary burden on employers and provides no benefit to employees, given that they are not eligible and will have already have been informed of their rights through the Casual Employee Information Statement provided for in the Bill.
3.51
While not opposing the casual conversion provisions, some organisations called for a longer transition period in order to facilitate the assessment of the status of existing casual employees following the bill's commencement.
For example, the Housing Industry Association proposed a transition period of 12 months in recognition of the complexity of the task, coupled with potential penalties for non-compliance.
3.52
However, the AMMA noted that, overall, the bill:
…contains a package of measured, balanced amendments that will reduce compliance costs, risk, red tape, and administrative burden in the IR system. This, in turn, will significantly support economic growth and job creation in the post-pandemic environment.
3.53
Other organisations welcomed the shift in obligation from employees to employers. In addition, the department explained that placing the onus on employers would guarantee timely reassessment of an employee's working arrangements and ensure a genuine and robust pathway to permanent, ongoing employment. It also noted that under existing casual conversion terms, the only obligation on employers was to notify casual employees, within 12 months of engagement, of their right to request conversion.
3.54
Despite some concerns, a number of submitters, including the NFF, the Franchise Council of Australia and the AMMA, argued that the bill struck an appropriate balance between enhancing employees' rights to convert and clarifying employer rights and obligations—particularly in relation to both the definition of a casual employee and potential contingent liabilities.
3.55
This balance was also highlighted by the RCSA, which supported the proposed provisions, despite their potential administrative burden:
…there is a need to ensure that certainty has regard to both parties to the employment relationship and does not come at the expense of fairness. It is for this reason that RCSA is generally supportive of the inclusion of casual conversion provisions within the Bill even given the significant additional administrative burden this will impose on its members.
Casual Employment Information Statement
3.56
The bill would require the Fair Work Ombudsman (FWO) to prepare and publish a Casual Employment Information Statement, which employers would need to give to all casual employees before, or as soon as practicable after, they begin their employment.
3.57
Some stakeholders expressed concerns about this provision. For example, the ACCI claimed it would create an 'unnecessary impost on employers', with the 'potential to create confusion and increase the regulatory burden on lawfully operating employers'.
3.58
Similarly, the Pharmacy Guild of Australia argued for removal of the provision and suggested the necessary information could be incorporated into the Fair Work Information Statement (which employers must provide to employees before or soon after commencing work). This view was shared by the National Retail Association:
We would also ask that the casual information statement … be somehow placed into the Fair Work Information Statement that is already given ... It can be onerous for [small businesses] to have more documentation to identify and provide.
3.59
However, the department submitted that employee awareness and use of conversion rights was low and that the provision would increase casual employees' understanding of their status, rights and entitlements—including casual conversion. This position was supported by the Queensland Government, which considered that the provision would 'promote better understanding on the rights of casual employees from the outset'.
3.60
Other stakeholders supported the provision but suggested minor amendments or additional actions. For example, McDonald's Australia proposed that employers should be able to provide the statement in any manner deemed appropriate (including electronically). The National Road Transport Association suggested a concurrent government education program be undertaken and that the impact of the information statement be monitored to assess its effectiveness in changing behaviour.
Offsetting claims for entitlements
3.61
The bill would introduce a statutory offset rule that would require a court to take into account the casual loading amount paid to casual employees who were later found not to be casual. The provision would prevent employers paying the same entitlements twice ('double-dipping') where a claim for entitlements was made.
3.62
This provision was broadly supported by a number of employer groups. For example, the AiG expressed the view that the approach had 'obvious merit and fairness'. Similarly, the NFF described the provision as 'fair, appropriate and practical' and noted that it would be:
…effective in providing certainty and minimise the risk of accidental misunderstanding and promote an employer-employee relationship built on trust and mutual agreement.
3.63
Professor Andrew Stewart and colleagues also recognised the need to provide protections for employers against paying twice for the same entitlements:
…a fair and balanced resolution of the problem highlighted by the Workpac decisions should include some protection for employers … who have unintentionally misclassified permanent employees as casuals ... we can also see the force in the argument that if an employee has been paid a casual loading that was both legally designed and intended by the employer to compensate for the absence of certain benefits, that payment should be taken into account in assessing an employer’s liability for failing to provide those benefits.
3.64
The department highlighted the impact of not taking action to address the issue:
…employers in these circumstances could face potential back pay liabilities of up to $39 billion for entitlements that an employee has already been compensated for in the form of a casual loading. This would also result in unfair and perverse outcomes between employees who receive both a casual loading and the entitlements it was intended to compensate for and ongoing employees who would receive only the entitlements ...
3.65
This position was also reflected in the submission by Business SA, which emphasised the risk and uncertainty facing small businesses:
…many industrial relations experts believe that there is no reason why the reasoning in [the Skene and Rossato cases] would not be applicable to a small business in other industries. And until this is tested in the courts, this type of uncertainty puts small businesses at an unacceptable risk.
3.66
The Australian Federation of Employers and Industries was unequivocal in its view about what would occur if no action was taken:
…the failure to protect businesses from double dipping would be counter employment, and almost certainly will result in job losses and even business failures.
3.67
However, some stakeholders questioned the ability to double dip in situations where employers have already offset the loading by employing casuals at a lower base rate of pay than equivalent ongoing employees. This view was supported by Per Capita, which cited research that found the full 25 per cent casual loading was rarely applied and that the actual loading paid was, on average, between four and five per cent.
3.68
In response, the department pointed to broader measures in the bill, which would address non-compliance with the Fair Work Act. These included stronger compliance and enforcement in relation to employer obligations like payment of casual loading, improved avenues for recovering unpaid wages, and sunsetting old enterprise agreements that may currently be undercutting modern awards by not providing employees’ entitlements like penalty rates or casual loading.
3.69
The department also explained that a court would only be able to offset a casual loading amount where it was clearly identifiable and paid as compensation for one or more of the entitlements of an ongoing employee. It noted that the provision would not apply where there was no identifiable amount or loading, or where it was not clear that a flat hourly rate included a casual loading. In summary, it argued that where a loading is not paid, no offset can occur:
The 'double dipping' offset provision only applies where an employee received a specified casual loading to begin with and this loading is sufficient to offset any paid leave entitlements. If it is not sufficient then the employer must pay the difference.
3.70
Some submitters raised concerns about the transitional provisions in bill which would result in the new definition of casual employee applying to employment offers given before, on or after commencement of the provisions. For example, while not disagreeing that some protections would be appropriate, Professor Andrew Stewart and colleagues suggested that the approach required greater justification and more careful analysis.
3.71
However, the BCA argued that application from the outset of the employment relationship was appropriate, as parties that had entered into casual employment arrangements prior to the Skene decision would have done so on the basis that there would be no entitlement to paid leave:
In practical terms, any such entitlement only 'crystallised' once the Skene decision had modified the previously understood definition of casual employment.
3.72
This shift in understanding was also remarked on by Mr Stephen Ferguson, National Chief Executive Officer, Australian Hotels Association (AHA):
It used to be that, if you were labelled a casual and paid as such, you were a casual. We understand that Rossato puts that very much into doubt. … What we're saying is that, especially as it applies to the retrospectivity, that wasn't our understanding going back for time immemorial.
3.73
The importance of the provisions applying from the outset of an employment relationship was conveyed by a number of submitters, including the ACCI, Business SA, and AMMA, which argued that without this application of the provision:
…the business community will continue to have a massive multi-billion liability hanging over its head. It is this liability, and the possibility to send businesses bankrupt, that first gave rise to the need for a true casual definition and this offset mechanism.
Additional hours for part-time employees
3.74
The bill would introduce a new Simplified Additional Hours Agreement. This would allow certain part-time employees to agree to work additional hours at their ordinary rates of pay in certain circumstances.
3.75
The introduction of the new Simplified Additional Hours Agreement was broadly supported by a range of employer groups. These groups asserted that the restrictive nature of existing part-time provisions acted as a disincentive to offering additional work to part-time employees.
3.76
The AiG argued that the provision offered 'important and fair flexibilities' that would allow part-time employees to work more hours. It noted this was particularly important for employers and employees in industries impacted badly by the COVID-19 pandemic.
3.77
The provision was also supported by Legal Aid Queensland, which submitted that employers would be able to reduce their reliance on casual employment and employ more part-time staff. This view was shared by other organisations such as Master Grocers Australia and the Franchise Council of Australia, which stated that:
A number of FCA members would be likely to employ more staff on a part-time basis if these measures were passed and allowed for employees to be provided with a guaranteed base of minimum weekly hours … but the ability to deploy staff to cover additional hours in a meaningfully flexible and economically viable way.
3.78
In supporting the provision, the AHA noted its similarity to the flexible part-time arrangements introduced to the Hospitality Award in 2018, which had 'been positive for employers and employees'.
3.79
Despite this support, a number of stakeholders suggested that the additional hours provision should be available to employees working less than 16 hours per week. For example, Ms Dominique Lamb, Chief Executive Officer, National Retail Association, argued that the majority of part-time retail workers would be excluded from Simplified Additional Hours Agreement because they do not work the required number of hours:
We would like to see the 16 hours reduced to 12 hours, because that would also capture other part-time workers and give them the opportunity to participate in this new, simplified additional hours agreement.
3.80
The BCA also supported lowering the minimum hours requirement. It suggested that making the additional hours provision available to part-time employees working a minimum of eight hours per week would benefit more part-time employees—particularly those in 'distressed sectors', who may not be able to regularly work 16 hours per week.
3.81
Conversely, employee organisations raised concerns that the minimum hours requirement would become a benchmark for part-time employment agreements. The Australian Nursing and Midwifery Federation argued:
We already have a problem with low contract hours in this sector, where … workers might be contracted to work a 10-hour week but they're working a 30-hour week over a 12-month to two-year period. … We're concerned that … this will be a model … to employ everyone at 16 hours and just flex up as necessary.
3.82
However, it was noted that some employee organisations subsequently agreed to support a similar proposal for additional hours for part-time employees through the FWC which guarantees fewer hours (nine) than the measure proposed in the bill.
3.83
The BCA also contended that fears about minimum hours requirements were misconceived:
…there is no financial benefit for an employer to reduce an employee's ordinary hours and then use flexible additional hours on an ongoing basis, as the hourly cost of the 'additional' hours is no different to the cost of rostering those hours as part of the employee's 'ordinary' hours. If anything, it would impose greater costs on the employer through the additional administrative burden and record-keeping obligations that will apply every time the employee worked 'additional' hours.
3.84
The department also noted that the 16 hour minimum would work in concert with other safeguards—including three-hour minimum periods of work—to ensure an appropriate balance between employers' needs for flexibility and employees' needs for certainty of hours and income.
3.85
In addition, the Australian Small Business and Family Enterprise Ombudsman suggested that these fears did not reflect the reality of employer-employee relationships in the small business sector:
Suggestions that small businesses will 'weaponise' [Simplified Additional Hours Agreements] unjustly characterises the relationship between small businesses and their employees. Successful small businesses require and rely on cooperation and trust with their employees. The … sector views [Simplified Additional Hours Agreements] as a tool to further build relationships with and expand opportunities for part-time employees.
3.86
Some stakeholders also raised concerns about employees feeling pressured to agree to Simplified Additional Hours Agreements, particularly in low-paid industries:
So they're going to be low-income earners, they're going to feel vulnerable in their jobs and they're going to be approached by their boss to work more hours without being paid penalty rates. Probably nine times out of 10 … they are going to feel like they have to accept that agreement.
3.87
In response, the department emphasised that any proposal for additional hours must be by mutual agreement, not direction. It also stressed that employees have an unambiguous right to refuse to enter into a Simplified Additional Hours Agreement and explained that any consequent adverse action by an employer would be a contravention of the Fair Work Act:
An employer will contravene the Fair Work Act and can be subject to civil penalties if they place undue influence or pressure on an employee to agree to enter into such an agreement … an employer would [also] contravene the Fair Work Act if they take adverse action against an employee … because the employee refuses to enter into an agreement.
Flexible work directions
3.88
There were mixed views about the flexible work provisions of the bill.
These provisions would extend, for a period of two years, the JobKeeper flexibilities in the Fair Work Act concerning duties and locations of work for employers and employees in a number of identified awards.
3.89
The provision was supported by a broad range of business and industry groups, who cited its importance to job retention and economic recovery in the wake of the COVID-19 pandemic. Mr Moss of the CCIWA, described the critical role the JobKeeper flexibilities had played in mitigating the drop in employment and working hours precipitated by the COVID-19 pandemic. Similarly, Business SA indicated that the provisions were an important step in ensuring employees return to work. It also argued that both employers and employees would rather:
…negotiate flexible arrangements than be forced, by Award provisions, to terminate the employment or breach the Award.
3.90
In supporting the provision, the AiG highlighted the broad support provided for the flexibilities at the time they were first introduced:
The provisions in the Bill represent a sensible and important extension of … provisions that were temporarily included in various awards with the support of major employer associations and unions.
3.91
The Franchise Council of Australia also argued that the flexibility provisions were 'sensible arrangements' that better reflected the reality of modern workplaces and the employer-employee cooperation that had marked the approach to the COVID-19 pandemic to date:
The suggestion that modern Australian workers will … only do a very limited and specific set of tasks according to a description in an industrial award and nothing else, is antiquated and antithetical to the collaborative and co-operative approach of most Australian workers and employers.
This … may be consistent with the political narrative being advocated by some in the industrial relations debate but this does not reflect the reality of the significant majority of Australian workplaces in 2021, nor does it is reflect the co-operation and collaboration between employers and employees seen in 2020 in dealing with COVID-19.
3.92
However, some employee organisations and other stakeholders raised concerns about the operation of this provision. Their concerns related primarily to the proposed benchmark for issuing flexible work directions and the planned safeguards for the provision.
3.93
A number of submitters were concerned that employers would not be required to demonstrate they had been impacted by the COVID-19 pandemic in order to issue a flexible work direction. Instead, an employer would be able to issue a flexible work direction if they reasonably believed it was necessary as part of a reasonable strategy to revive their enterprise. The Queensland Nurses' and Midwives' Union described these terms as 'broad and ambiguous' and questioned the rationale for:
…allowing employers who have not been impacted by the pandemic to provide directions and consequently have greater flexibility over employees.
3.94
This view was supported by the Australian Council of Social Services, which suggested that the flexibilities should only continue in workplaces attracting JobSeeker subsidies.
3.95
In relation to the proposed safeguards, a number of stakeholders questioned whether they would be sufficient to protect employees. For example, the ACTU queried what it perceived as a 'limited requirement to consult', as well as a lack of access to arbitration by the FWC in the event of a dispute.
3.96
This view was shared by Legal Aid NSW, which acknowledged the challenges inherent in the post-pandemic economic recovery but contended:
...the proposed changes would make it difficult for employees to effectively dispute unreasonable flexible work directions. Unlike the JobKeeper provisions, which had special dispute resolution provisions, disputes about flexible work directions will be determined … in accordance with the … mechanism in the relevant award. This process can be complex and time consuming … It could also lead to uneven outcomes as some Modern Awards only provide for consent arbitration at the Fair Work Commission.
3.97
In response to the concerns, the department noted that flexible work directions would be subject to important safeguards, including that they must be reasonable in all circumstances and could only be used where an employer reasonably believed the direction was a necessary part of a reasonable strategy to assist in the revival of the enterprise. The department also contended that the specific rules regarding the consultation and timing of flexible work directions—including a minimum three day written notice period—would ensure employees had the opportunity to raise any concerns with their employer prior to the direction's commencement.
3.98
In response to concerns about the proposed dispute resolution arrangements, the department also cited the low level of disputes that had arisen as a result of JobKeeper directions:
Of the 3.5 million employees in the JobKeeper scheme, there were 797 disputes lodged with the Fair Work Commission as at 28 January 2021, a disputation rate of less than 0.023%. Of those disputes, 61 related to duties and location of work. This demonstrates that employers have generally used these new provisions appropriately and that employees appreciated the need for everyone to be flexible at this time given the unprecedented pressure placed on employers and employees as a result of the COVID-19 pandemic and subsequent economic recovery.
Enterprise agreements
Notice of employee representational rights (NERR)
3.99
This provision would extend the period for issuing the NERR—from as soon as practicable and not more than 14 days—to as soon as practicable and not more than 28 days after the employer initiates bargaining (the 'notification time'). It would also require the FWC to publish the notice on its website.
3.100
The provision was supported by a number of stakeholders. For example, Professor Andrew Stewart and colleagues saw 'no problem with the proposed changes', while Master Builders Australia noted that:
The benefits arising from this change will be to remove a burdensome administrative process that has gained some infamy in terms of being grounds for the rejection of a proposed EBA.
3.101
Some stakeholders, such as the AMMA and the ACCI, went further and suggested the NERR should either be abolished or made an information function of the FWC. Despite this, both organisations supported the provision. The ACCI described it as a 'powerful and significant change towards making the system more useable and reliable, while the AMMA stated the changes were 'well justified and would have real material impact on streamlining and reducing risk in the agreement making process'.
3.102
Conversely, a range of employer groups viewed the proposed changes as unnecessary. For example, the ACTU argued that extending the period for issuing the NERR was not needed and would:
…disadvantage employees by undermining their right to be represented during negotiations for a new enterprise agreement. This significant extension to the timeline will make it easier for employers to finalise the content of agreements before employees have even been notified of their right to representation.
3.103
The Construction & General and Maritime Union of Australia (MUA) divisions of the Construction Forestry Maritime Mining Energy Union (CFMMEU) also rejected descriptions of the NERR as 'no more than an administrative technicality' and highlighted its role in 'ensuring that workers are well informed and aware of their right to be represented'.
3.104
However, the ACCI maintained that the complexity of the current process spoke to the need for greater administrative simplicity:
The FWC currently produces a five-page guide to preparing a one-page NERR, in response to the regular problems experienced in meeting the notification obligations. This illustrates the complexity and scope for error in the current [Fair Work] Act.
3.105
In response to concerns about the timeframe for issuing the NERR, the department noted that the provision would not change the requirement for it to be provided 'as soon as practicable'. It reiterated that if employers could 'reasonably provide the notice sooner than 28 days, they must'.
3.106
This was supported by the CCIWA, which took the view that in most cases, the NERR would continue to be issued within 14 days:
CCIWA welcomes the proposal to extend the timeframe for issuing the NERR … which will aid employers with a large workforce or where workers are located across multiple worksites. Employers will still be required to issue the document as soon as practicable, which in most circumstances will continue to be within the current 14 day timeframe.
Pre-approval requirements
3.107
While retaining the requirement that employees must have 'genuinely agreed' to an agreement, the bill would amend the Fair Work Act to be less prescriptive about what employers must do to ensure that this is the case. Under this provision, employers would need to ‘take reasonable steps to ensure that the relevant employees are given a fair and reasonable opportunity to decide whether or not to approve the agreement’.
3.108
Stakeholder views on this amendment were mixed, with many employer groups strongly in favour of the provision. In supporting the provision, some stakeholders noted that the changes offered an appropriate balance of flexibility and protections for employees, with greater focus on engagement between the employers and employees in question. For example, Master Builders Australia stated that:
The changes … are focussed on ensuring the core obligations required of parties as part of the negotiation process can be maintained, while concurrently giving flexibility to those parties as to how these core obligations are to be met.
3.109
Similarly, the National Retail Association observed that the changes would remove the need for the FWC to consider 'whether a hypothetical step not taken would cause the pre-approval requirements to not have been met'. At the same time, it maintained that:
…the inclusion of the words 'fair and reasonable opportunity' provides the necessary context to value and weigh the reasonableness of the steps that were actually taken, and as such the Bill does not operate to erode the protections provided by the pre-approval requirements.
3.110
The NFF highlighted the potential positive impact on particular industries, such as agriculture. It stated that while the changes were not as extensive as they could have been, they were' reasonable and fair' and would remove 'arbitrary requirements which do little else but add to the practical challenges of entering into an agreement'. Further, it argued that the simplified rules would allow employees to focus their efforts on employees to whom an agreement would apply:
This is massively advantageous for those with large or specialised workforces that work across multiple areas, which is frequently the case in agricultural workplaces.
3.111
However, the provisions were opposed by a number of employee organisations and advocates. For instance, the Queensland Nurses' and Midwives' Union raised concerns that the changes would weaken pre-approval requirements by lowering the standards required of employers. As an example, it suggested that:
…an employer would be able to take fewer measures to notify employees and provide access to the agreement.
3.112
The Victorian Trades Hall Council also pointed to a perceived lack of clarity around the definition of what constituted a 'fair and reasonable' opportunity for workers to decide whether or not to approve an agreement.
3.113
In response, the department highlighted the consistency of the proposed amendment with other provisions of the bill aimed at 'removing unnecessary technical barriers to enterprise bargaining and putting power back in the hands of the parties to an agreement'.
3.114
It also explained that reasonable steps would be likely to include 'ensuring that employees have access to the draft agreement, that the agreement is properly explained to them (taking into account their particular circumstances), and that they know when and how to vote'.
3.115
The department noted that the definition of 'fair and reasonable' would vary between workplaces. It argued that this would allow employers to consider the particular circumstances of their own employees and workplace, rather than having to conform to a one-size-fits-all approach:
…a smaller employer with a full time workforce working in the same location might need to take a different approach to a larger employer with a diverse workforce and complex work patterns and arrangements. … This is preferable to the existing process oriented to ‘one size fits all’, which is inflexible and can lead to agreements not being approved on technical grounds.
3.116
This potential for efficiencies was also observed by the FWC, which suggested this provision could 'reduce the proportion of applications in which the Commission must consider the impact of non-compliance with pre-approval requirements'.
Voting requirements
3.117
The bill would amend the Fair Work Act to clarify that a casual employee would be eligible to vote to approve an enterprise agreement if they had worked at any time during the access period (seven calendar days before the request to vote was made).
3.118
The benefits of additional clarity about casual employees' voting rights was recognised by a range of submitters, including the ACCI, the Community and Public Sector Union (CPSU), and Professor Andrew Stewart and colleagues.
3.119
The need for clarity was also highlighted by the department, which explained that the current arrangements had caused confusion and led to litigation, with some employers abandoning bargaining or withdrawing applications for approval from the FWC. This view was supported by McDonald's Australia, which noted that:
…the lack of clarity and certainty regarding how the roll of voters was to be determined in the enterprise agreement voting process was a significant contributing factor to [McDonald's] decision to withdraw its application for approval of its most recent proposed enterprise agreement.
3.120
There was also support for the detail of the proposed amendment. For example, Professor Andrew Stewart and colleagues noted that:
There has been considerable uncertainty in the case law on this issue, and the changes proposed seem to us to represent a workable solution to the problems identified.
3.121
The CCIWA shared this view and submitted the bill would remove confusion surrounding casual voting rights. Similarly, the ACCI also described the proposed amendment as 'a practical, clear approach which employers can work with, and which will provide clarity to employees and unions'.
3.122
However, some employee organisations opposed the proposed amendment and raised concerns it could encourage employers to alter rosters to influence which employees could vote for a proposed agreement. For example, while supporting the goal of increased clarity, the CPSU suggested the proposed change would:
…allow employers to influence who is entitled to vote on an agreement by deciding when the vote will take place (i.e. during a slow period when not many casuals are engaged, or when there are an abnormally high number of casuals to drown-out others groups of employees).
3.123
The Flight Attendants' Association of Australia also cautioned that the provisions could have a disproportionate impact on employees in particular industries:
It is not unusual for a casual employee to not work for a 7-day period due to rest requirements or where their flying hours’ limitations for the week, fortnight or month are exceeded.
3.124
However, other submitters, such as the ACCI maintained that the 'very narrow and specific changes' proposed in the bill would 'in no way diminish or threaten democratic approval, nor detract from employee rights'. Likewise, the National Retail Association asserted that the change would not remove the need for an enterprise agreement to be approved by the majority of employees. This view was supported by Mr Martin Hehir, Deputy Secretary, Attorney-General's Department, who reiterated that the bill would not change the requirement for genuine employee agreement.
Better off overall test (BOOT)
3.125
Stakeholders expressed diverse views and presented a range of competing evidence in support of arguments for and against the proposed changes to the BOOT.
3.126
Overall, there was broad business and industry support for the changes to the BOOT. In its submission, the AiG described the BOOT as 'unworkable' and asserted that it had led employers to revert to modern awards, rather than navigate the enterprise agreement making process. This view was shared by the AMMA, which argued that employer frustrations stemmed from the overly technical and forensic application of the BOOT by the FWC:
Such an approach has stripped any practical, qualitative assessment from the BOOT. … this flawed technical approach is not only applied to existing and reasonably foreseeable working arrangements, but a seemingly endless range of hypothetical, often highly unlikely scenarios not foreseen by any parties to the agreement...
3.127
Mr Wayne Spanner, Member, BCA, contended that this forensic approach had moved the BOOT away from its intended purpose as overall assessment of whether employees are better off:
…it's mutated to a 'better-off-in-every-respect' test. It's now a strict line-by-line audit. Agreements have become 'award plus a bit extra', and they're not genuine alternatives to awards, which was the ultimate intention...
3.128
However, employee groups and other stakeholders opposed the provisions and raised concerns (albeit without foundation in any measures in the bill) that removal of the BOOT would drive down wages and working conditions for employees. For example, the Victorian Trades Hall Council submitted that:
The BOOT is vital and uncompromisable. It underpins our standard of living and fair work conditions across every industry. Without the BOOT, we risk a race to the bottom with far-reaching and long-lasting negative consequences for wages, workplace safety and household budgets.
3.129
This position was supported by the Health Services Union, which also submitted that that once workers' entitlements had been eroded, they would be very difficult to reinstate.
3.130
However, the ACCI referred to such arguments against the amendments as baseless and submitted that claims the BOOT was being abolished were 'simply untrue under any fair reading of the bill'. It argued that such claims were at odds with how the amendment would operate, as well as how the FWC approaches its statutory duties:
This is in no way a recipe for widespread wage cuts and it is not appropriate or true to make such claims.
3.131
The department also highlighted that current issues with the application of the BOOT—such as those identified by the 2012 Post-Implementation Review of the Fair Work Act and the 2015 Productivity Commission Inquiry into the Workplace Relations Framework—discouraged agreement making and innovation. Further, it stated that:
Rather than changing or reducing the protections offered by the BOOT, the Bill clarifies the application of the BOOT in order to reduce the need for undertakings, speed up the approval process, provide parties with more certainty in negotiations, and ensure the views of employees are given significant weight when the Fair Work Commission assesses whether they will be left better off overall by the new agreement.
3.132
In addition to these general views, stakeholders also expressed varied opinions about specific elements of the provision, particularly the inclusion of non-monetary benefits in the FWC's assessment of overall benefit, and the proposed changes to existing public interest exceptions in the Fair Work Act in response to the COVID-19 pandemic.
Inclusion of non-monetary benefits
3.133
A number of employee groups opposed the use of non-monetary benefits to offset financial benefits, particularly given their uncertain and subjective nature. The UWU highlighted the difficulties presented by non-monetary benefits:
…the Fair Work Commission itself has referred on a number of occasions to the difficulty in attributing value to non-monetary benefits, especially when those non-monetary benefits are dependent on contingent outcomes not known at the time the BOOT test is conducted, and where usually, non-monetary benefits do not apply consistently to all employees.
3.134
The National Foundation for Australia Women contended that the inclusion of non-monetary benefits could have a disproportionate impact on low-paid employees:
For many low paid workers, every cent … counts towards daily living expenses and in no way should be replaced by non-monetary items which, in any event, have been nominated and designed by the employer and may … be of more benefit to an employer than an employee.
3.135
However, the department contended that the bill provided certainty and simply clarified existing arrangements, given that the FWC already considered non-monetary benefits in the BOOT as it stood under the current law.
3.136
Similarly, the AMMA contended that the change was just formal recognition that the 'employer value proposition of modern-day businesses extends far deeper than financial benefits alone' and that many employees value the 'non-remunerative parts of their work arrangements as highly as the remunerative'.
Changes to the existing public interest exceptions
3.137
A number of stakeholders opposed the proposal to adapt the public interest exceptions to the BOOT in response to COVID-19. Some questioned the need for the change and suggested the impact of COVID-19 could already be addressed using existing public interest exceptions. Others raised concerns about the length of time that agreements approved under this provision would operate, despite the proposed sunset clause and the fact their duration would be consistent with existing public interest exceptions to the BOOT. For example, the CPSU argued that:
Although the proposed s189(1A) automatically sunsets after 2 years, it may be an additional 4 years before the agreement expires, and even then, [it] may stay in operation long after its nominal expiry date. Therefore, the effects of this change may continue for over 6 years.
3.138
As is the case with the existing public interest exceptions to the BOOT, other stakeholders pointed to the potential for agreements approved under this provision to operate even longer:
The apparently 'temporary' nature of the proposed amendment is no comfort, given the possibility that enterprise agreements negotiated under these 'temporary' conditions remain valid indefinitely until terminated.
3.139
In response to these concerns, the department highlighted the safeguards that would prevent inappropriate use of the amended public interest exception:
As with the existing public interest exception, this provision will not be able to be used at all unless, before the agreement goes to the Fair Work Commission, a majority of voting employees have already voted in favour of the agreement.
3.140
Industry groups also noted these safeguards and indicated there was 'nothing untoward' in providing the FWC with the ability to consider applications from businesses in difficult circumstances. For example, Business SA recognised that the exception would not be open to all businesses but supported its inclusion on the basis of the proposed protections. Similarly, the AMMA agreed that that the safeguards would prevent the exception being used too widely:
It would … be extremely unlikely, if not impossible, for an employer to gain approval of an agreement that does not pass the BOOT, and for that approval to stand-up to FWC and Court appeal processes, without a compelling case.
3.141
The Government amended the bill in the House of Representatives on 23 February 2021 to remove these changes following feedback from crossbench Senators.
National Employment Standards (NES) interaction terms
3.142
The bill would amend the Fair Work Act to remove the requirement for the FWC to satisfy itself that an agreement did not contain any terms that contravene or undercut the NES. Instead, the FWC would need to be satisfied that an agreement contains a NES interaction term, which would be prescribed by regulation.
3.143
This provision was broadly supported by business and industry groups.
For example, the Australian Retailers Association described the provision as 'a sensible amendment that will correct a deficiency in the current legislation'.
It contended that the inclusion of the NES interaction term would:
…eliminate a requirement that is of minimal utility (that terms of the agreement do not contravene the NES) and which almost invariably results in unnecessary delays in the approval process due to the need for undertakings. Critically, the amendment has no detrimental impact on employee rights.
3.144
A number of submitters opposed the provision and raised concerns that this could result in agreements being approved with terms that 'have no legal effect, but remain in the agreement itself'. For example, while acknowledging that the amendment would 'reduce delays associated with the FWC seeking undertakings', the CPSU argued that the provision would shift the onus to monitor compliance from the FWC to employees, many of whom would not be familiar enough with the 'the NES to enforce their rights'.
3.145
However, the department emphasised that the amendment would 'in no way enable employers to avoid the NES'. Instead, it argued that the changes would simplify and expedite the approval process by reducing the number of undertakings sought by the FWC. This view was supported by the National Retail Association, which noted that:
The inclusion of such a term as a matter of course is therefore likely to reduce the need for undertakings to be provided, while at the same time not otherwise impacting the rights of the parties to the agreement.
Variation of single enterprise agreements to cover eligible franchisee employers and their employees
3.146
The bill would introduce a new process whereby employees of a franchise could agree that an enterprise agreement that applied to other employees and employers under the same franchise also extended to them.
3.147
While this provision drew relatively few comments, it attracted strong support from some stakeholders, including the National Retail Association and the Franchise Council of Australia.
3.148
The National Retail Association pointed to the strong incentive the change would provide for small businesses to engage in enterprise bargaining, as well as the likelihood of 'more consistency in the industrial instruments that apply across a franchise'.
3.149
The department also noted the safeguards that would apply to the proposed amendment. These included the need for the FWC to be satisfied that an agreement had not passed its nominal expiry date and that there were no grounds for believing the affected employees did not agree to the variation.
Terminating agreements after the nominal expiry date
3.150
The bill would amend the Fair Work Act to provide that applications to terminate an agreement could only be made at least three months after its nominal expiry date. This provision would not change the requirement for the FWC to be satisfied that the termination was both appropriate and not contrary to the public interest.
3.151
The provision was designed to prevent employers from using termination as a tactic to pressure employees to accept an agreement they might not otherwise support.
3.152
While this provision drew fewer comments than other aspects of the bill, stakeholders appeared divided on both the need for, and impact of, the proposed amendment. For example, the proposed change was endorsed by stakeholders such as Master Grocers Australia and the Queensland Government:
Queensland supports the amendment … aimed at preventing immediate termination of EBAs after their nominal expiry. It notes that employers have increasingly exercised the termination of expired agreements to return workers to the award after failed bargaining negotiations.
3.153
Others, such as the AMMA, thought the provision responded to 'unfounded union concerns' but did not oppose the change as it appeared 'to be put forward in the interests of encouraging good faith re-negotiation attempts, prior to any party threatening to apply for termination'.
3.154
Conversely, the provision was opposed by stakeholders such as the CCIWA, the ACCI, and the Pharmacy Guild of Australia, which argued that the amendment was of 'little merit' and would preclude the timely termination of non-controversial expired agreements.
3.155
Concerns about the delay in terminating agreements were also raised by the Queensland Nurses and Midwives Union. It highlighted the impact of such delays in the aged care sector, where base rates of pay and conditions in enterprise agreements were relatively low and could be overtaken by improvements in pay and conditions under the relevant award:
In such a case, we would make an application to terminate the agreement. The proposed three-month delay … will deprive employees of more beneficial award wages and/or conditions for three months or more.
3.156
However, a number of submitters called for even greater protections against one-sided termination applications. For example, the Australian Workers' Union argued that it was unacceptable that an employer could act unilaterally to move employees off an enterprise agreement and onto award conditions:
The applications have been repeatedly used by employers as leverage to force employees to accept changes to the conditions in their enterprise agreement via the threat of being placed on award conditions. The Bill does nothing to prevent this type of bullying conduct by wealthy multi-national corporations and other employers in the future.
3.157
However, employer groups, such as Master Builders Australia, expressed reservations about the extent of the problem and stated it was 'unaware of any instances where this tactic is deployed'. This view was shared by the CCIWA, which argued that union concerns were based on 'a small handful of applications' where employers had sought to terminate an agreement during the renegotiation stage.
3.158
The AMMA agreed and pointed out that of the approximately 440 applications made each year to terminate agreements, less than three per cent were opposed by employers or employee groups. The AMMA also pointed to the safeguards in place when such applications were made, including the need for the FWC to take the public interest into account:
Such applications are considered very carefully by the FWC, and only approved where there is a compelling case to do so – for example, if the agreement’s ongoing application in the workplace threatens the ongoing viability of the business and the jobs it supports.
3.159
This view was supported by the department, which argued that the FWC had shown it gave careful consideration to applications to terminate agreements and had often decided that approving a termination would be inappropriate and/or contrary to the public interest.
How the Fair Work Commission may inform itself
3.160
The bill would amend the Fair Work Act to ensure the FWC focused on the views and evidence of 'prescribed persons' during the agreement approval process. Prescribed persons would include the parties involved in bargaining for an agreement, such as the employer, employees, trade unions involved in bargaining and other employee bargaining representatives.
3.161
This provision was supported by a number of stakeholders, many of whom noted the amendment would help to address delays caused by the interjection of third parties in the approval process. For example, the Franchise Council of Australia described the change as a 'sensible' reform, which would:
…reduce the potential complexity and added delay from parties external to an enterprise and a bargaining process … imposing themselves and interfering with an agreement approval process.
3.162
The CCIWA agreed and argued that primacy should be given to the views of the employer and the employees—or those representing the employees—covered by an agreement. It observed that the amendment would preserve that right but would limit disruptions to the process by those without a direct interest in the matter.
3.163
The unnecessary delay, cost and disruption caused by submissions from third parties was also noted by the department. It pointed to the frustration that could arise when those not involved in the bargaining process made extensive claims that had already been considered and dealt with by the employer and employee bargaining representatives during negotiations.
3.164
However, other submitters opposed the provision. For example,
Mr Zachary Duncalfe, National Legal Officer, Australian Workers' Union, argued that the amendment would reduce union scrutiny of agreements, which would increase the workload of the FWC and lead to substandard agreements 'slip[ping] through the cracks'.
3.165
In response, the department pointed to the 'exceptional circumstances' provision, which would enable the FWC to inform itself in other ways and allow for the involvement of non-prescribed persons, such as unions that were not bargaining representatives. This view was supported by the AMMA, which contended that in light of the exceptional circumstances provision:
…these proposed amendments do not water down or remove any employee protections. Rather, they provide the FWC with greater discretion as to when the involvement of organisations and individuals with an otherwise tenuous case to be heard, should be legitimately considered.
3.166
Likewise, the Franchise Council of Australia described the exceptional circumstances provision as:
…appropriate and … consistent with an acceptance that responsibility for applying the system rests principally with the independent industrial tribunal.
Time limits for determining certain applications
3.167
There were mixed views about this provision, which would require the FWC to determine applications for approval of enterprise agreements within
21 working days (as far as practicable). Where an agreement required a longer period of consideration, the FWC would need to inform the parties of the reason for the delay.
3.168
There was strong support for this amendment from business and industry groups, who pointed to the detrimental impact of long delays in approving agreements. Master Builders Australia observed:
…these [delays] often flow on and delay wage increases anticipated by the parties which has an adverse impact on both the employer, employees and workplace generally … it is reported that delays … can erode workplace trust and create an impression that 'something must be terribly wrong'...
3.169
Master Builders Australia noted that the proposed changes would help to reduce these types of concerns as the reason for any delay in approval would be known to the parties involved. This was supported by the National Retail Association, which stated that the provision would 'alleviate much of the frustration with current approval process'.
3.170
However, the amendment was opposed by a number of employee organisations. For example, the Australian Workers' Union questioned the need for the amendment given the actions taken by the FWC to improve application approval times. Other submitters, such as the ACTU, argued that the amendment could lead to agreements:
…being rushed through without proper scrutiny and/ or the FWC being forced into rejecting applications rather than working with the parties to make the agreement compliant with the regulatory framework.
3.171
These concerns were not shared by Professor Andrew Stewart and colleagues, who did not oppose the requirement for the FWC to approve agreements within a set time period. Their comfort with the change was underpinned by their understanding that the FWC would not be encouraged or compelled to sign agreements that did not meet statutory criteria.
3.172
While the FWC disagreed with the need for a 21 day approval period, it also stated that compromising the rigour of its decision-making process was not an option, particularly given the consequences for the parties involved of wrongly approving an agreement. The FWC made clear it would:
…continue to do everything it can to determine applications for the approval of enterprise agreements as quickly as possible with the resources available to it, while maintaining the high level of rigour the community expects.
3.173
The department highlighted that the qualification to the 21 day timeframe—'as far as practicable'—would enable the FWC to take additional time to consider agreements when needed. This was also noted by the National Retail Association, which referred to the 'broad and unlimited power' of the FWC to extend the 21 day approval period.
3.174
The AMMA also pointed to the flexibility provided to the FWC and observed that inclusion of the words 'as far as practicable' made it clear that:
…this amendment is more about setting clear expected standards of efficiency on the tribunal and not in any way interfering with or diluting its discretion to take longer to approve an agreement, or not approve an agreement, as it deems necessary.
Fair Work Commission functions
3.175
There was limited stakeholder discussion about these provisions, which would clarify that the FWC must perform its functions and exercise its powers in relation to enterprise agreements ‘in a manner that recognises the outcome of bargaining at the enterprise level’.
3.176
The clarification was supported by some business and industry groups. For example, Master Builders Australia suggested that this was a 'minor but significant and important change', while the ACCI argued that the change was aimed at:
…elevating the importance of the democratic decision making of the majority of employees, elevating the voice and input of bargaining representatives over non-representatives and to the extent possible not allowing technicalities and procedural considerations to override or displace the clear will and priorities of employers, employees and bargaining representatives
3.177
Other stakeholders opposed the provisions, with the Australian Workers' Union describing the reference to 'outcomes of bargaining' as misleading, given that some agreements would not have involved bargaining.
3.178
In response, the department reiterated that this change would not undermine existing protections, or those proposed by the bill. Instead, it argued that:
…the Fair Work Commission's role is to focus on—and give due weight to—what employers and employees have agreed to when bargaining. Serious errors and issues will not be able to be overlooked, but the … Commission will be required to recognise the outcome of bargaining.
Transfer of business
3.179
There was a significant level of support for the proposed amendment, which would ensure that industrial instruments do not transfer with employees who move voluntarily between associated entities. For example, the AMMA considered that the provision was a 'common sense and long-overdue amendment' that would make it easier for employees to transfer between associated entities. It argued that:
This flexibility is especially important in the context of the COVID-19 economic challenges, where the ability of an employee to transfer to an associated entity, without imposing a penalty on the new employing entity, will likely save people from being made redundant.
3.180
Similarly, the BCA pointed to the impact of current arrangements on the ability of businesses to restructure and transfer stood-down employees into new jobs during the COVID-19 pandemic:
For example, Wesfarmers could not transfer 5,000 stood down employees of Target to Kmart or Bunnings in response to increased demand. Whilst the Fair Work Commission can grant exemptions, such an outcome is not assured and the process itself is often not commercially feasible, or able to be done in a timely way.
3.181
However, a number of employee groups opposed the provision and raised concerns about the potential for employers to engineer employee movements to avoid the transfer of agreements. For example, the ACTU argued that the change would 'allow major corporations to manipulate or manufacture 'employee initiated' transfers to the detriment of their workforce'. Similarly, the CPSU cautioned that the employers could pressure an employee 'to either ‘voluntarily’ transfer to an associated entity without their enterprise agreement or face being made redundant'.
3.182
In response, the department stressed that the amendments are not intended to apply to situations where the employee is forced to seek new employment within a corporate group in the context of an organisational restructure, for example, in a redundancy, redeployment or stand down scenario.
3.183
The department also highlighted that the current arrangements can work against employee interests by discouraging employers from agreeing to transfers that would meet employee preferences. This view was supported by the AiG and the National Retail Association, which described the impact on its members:
In the case of one member of the NRA, the existing requirements have resulted in a policy whereby transfers between entities will generally not be approved except in exceptional circumstances, thereby limiting the opportunity for career progression within businesses.
Cessation of certain instruments
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There was significant support for this proposed amendment, which would provide that enterprise agreements made before the commencement of the Fair Work Act would sunset by 1 July 2022. For example, the Victorian Government expressed its support for the termination of long-expired 'zombie' enterprise agreements, which it argued could undermine the award safety net.
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Professor Andrew Stewart and colleagues described the sunsetting of these agreements as 'a welcome and long overdue step' and argued that:
It is well and truly time that a line is drawn under previous agreement-making regimes, some of which operated with few of the safeguards built into the current law. Employers have had well over a decade to make new agreements, or learn to live with the modern award safety net.
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While supportive, some submitters questioned the need to delay cessation of these instruments until 1 July 2022. For example, the ACTU highlighted that by that time, some of the agreements would be up to sixteen years old.
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Other stakeholders raised concerns that the provision would not protect workers who might be worse off following the termination of a 'zombie agreement'. For example, while the Health Services Union acknowledged that many 'zombie agreements' had undercut workers' pay and conditions, it also argued that some had preserved favourable pre-modern award conditions:
…these 'zombie agreements' contain a number of other provisions not contemplated in the Modern Award including parental leave, accident make-up pay and more favourable shift allowances.
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In response, the department argued that delaying cessation of these instruments until 1 July 2022 would provide businesses with sufficient time to negotiate new agreements with their employees. While noting this could be burdensome for some employers, the department believed that:
…the benefits of drawing a line in the sand and moving employees off these old agreements to new agreements that must pass the BOOT and be assessed against a modern award outweigh this consideration.
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The department also stressed that the change would help level the playing field by removing the ability for employers using 'zombie agreements', which do not pass the BOOT, to undercut competitors who use the modern award.
Greenfields agreements
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Submitters presented a range of evidence both in support of, and in opposition to, the proposed greenfields agreements provisions. These provisions would allow the FWC to approve longer-term (up to eight years) agreements made in relation to the construction of a major project. Greenfields agreements longer than four years would need to provide for annual pay increases for the nominal life of the agreement.
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The provisions were strongly supported by business and industry stakeholders who highlighted their importance to investor certainty and employment. For example, the AMMA described the proposed changes as a 'sensible and long overdue reform, critical to securing the next wave of resources and energy project investment'. To illustrate the value of these projects, the AMMA pointed to 237 major projects, worth approximately
$250 billion, that were in early feasibility stages:
The employment potential of this more speculative investment pipeline would easily exceed 100,000 jobs. Providing a platform of greater industrial stability to the international investors who make the decisions on where to allocate such capital, would significantly increase Australia's chances at securing a large portion of this investment potential.
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In supporting the provisions, Mr Moss, CCIWA, agreed that they would 'play a significant role in promoting investment in … major resource and infrastructure projects within Australia'. Mr Moss also took the view that the provisions responded to the concerns of both employers and unions. The CCIWA described the provisions as a compromise that took account of:
… the need to provide greater certainty in establishing terms and conditions of employment for the duration of a major project, whilst restricting this option to greenfield agreements and establishing a requirement for guaranteed wage increases.
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However, these views were not universally shared, with some employee groups and other stakeholders raising a number of concerns about their operation. Three of the more commonly cited concerns related to the need for longer-term greenfields agreements, the provision for an eight-year agreement term, and the cost threshold for a major project.
The need for longer-term greenfields agreements
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Some stakeholders questioned whether longer-term greenfields agreements were required to attract investment. For example, Mr Peter Bauer, State Secretary, Australian Manufacturing Workers Union, argued that:
We've got the skills, the infrastructure and the ability to attract jobs in any event. I think all the greenfields agreements legislation will do is disadvantage workers in relation to their ability to negotiate a proper agreement in which they get a say in their terms and conditions.
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Other stakeholders denied that industrial action was a threat to investment in longer-term projects. For example, the Australian Workers' Union cited low rates of industrial action in Australia and argued that there was no evidence of a trend that major projects were being delayed by industrial action associated with enterprise bargaining. The CFMMEU – Construction & General and MUA divisions agreed and stated that:
…cost blowouts and delays that have arisen on large projects were not due to construction workers' attempts to negotiate their wages and entitlements.
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However, Mr Moss of the CCIWA, contended that the inability to negotiate employment terms for the duration of a project posed a risk to investment:
…the inability to fix labour costs for the duration of longer-term projects is a significant factor that's taken into consideration when considering investing in Australia compared to other developed countries. It's a liability that we have that our competitors don't.
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In support of this argument, Mr Moss cited the Fraser Institute's international attractiveness index survey, which ranked Western Australia as number one out of 76 jurisdictions based on geographical desirability. However, Mr Moss noted that its ranking fell to number five once policy factors, including industrial relations, were taken into consideration.
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Similarly, the department pointed to the World Economic Forum’s Global Competitiveness Report 2019, which ranked Australia 57th in labour market flexibility, 95th in flexibility of wage determination and 53rd in cooperation between employers and employees out of 141 countries surveyed.
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The department also indicated that the current four-year limit on greenfields agreements had been a key concern raised with the Australian Government in the context of attracting investment for major projects. It asserted that:
The risk of exposure to renegotiating wages and other conditions – including the consequent possibility of protected industrial action and protracted bargaining – during the critical build of a project, has created a perception of cost and timing uncertainty, affecting the ability of projects to attract investment.
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This view was reinforced by the AMMA which contended that the four-year limit on greenfields agreements had exposed significant resources and energy developments to industrial disruption, often at critical points in time. It argued:
With multi-billion-dollar export deals at stake and their investment being placed at risk, the system effectively forces project owners to accept inflated and uncompetitive union demands or risk further delays to project approval.
The provision for an eight-year agreement term
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Some employee groups raised concerns about the provision to allow for eight-year greenfields agreements. For example, the Electrical Trades Union submitted that once such an agreement was made, it could only be varied at the employer's initiative until it passed its nominal expiry date. According to Mr Robert Smith, Member, Electrical Trades Union, this would mean that there would be no incentive for employers to rectify issues identified in projects during that time.
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Others, such as the CFMMEU – Construction & General and MUA divisions, argued that this provision would also remove incentives for employers to reach agreement with unions and would strengthen the rights of employers to unilaterally make non-union greenfields agreements.
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In response, the department explained that eight years was selected as the maximum expiry date as it would provide the flexibility to cover a greater range of projects:
The effect of this reform is that an additional 28 per cent of projects will be able to negotiate a greenfields agreement that covers the entire construction of the project, than is currently the case under the relevant provisions in the Fair Work Act.
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It also noted that the Productivity Commission's 2015 inquiry into the Workplace Relations System recommended that the Fair Work Act be amended to give the FWC the ability to approve agreements that 'better match the construction period of a major project'.
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Mr Hehir, Attorney-General's Department, also made clear that:
…the reforms do not mandate an eight-year nominal expiry date for greenfields agreements. Employers and unions can agree the period of the agreement up to a maximum of eight years.
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Similarly, the ACCI stated that it was 'irresponsible and incorrect' to suggest that the bill would allow the use of longer-term greenfields agreements in all but the most exceptional greenfields circumstances'. The AMMA also argued that a phased approach to major projects, combined with high labour mobility, would mean it was rare for an individual to be employed under a greenfields agreement for more than four or five years:
Any attempts to characterise extended greenfields agreements as a mechanism to 'trap' employees for an unreasonable or excessive number of years, would be disingenuous and ignorant of the phased approach to major project construction.
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In addition, the department highlighted the requirement for any greenfields agreement longer than four years to provide for annual increases to the base rate of pay for the nominal life of the agreement. The department also pointed out that greenfields agreements 'must be negotiated with a union' and that employees would retain their current ability to resolve disputes that arise during the nominal life of the agreement.
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The ability of unions to successfully negotiate greenfields agreements was recognised by Mr Moss of the CCIWA, who noted that:
…unions have demonstrated their capacity to negotiate greenfields agreements which are favourable to themselves and their members. The reality is that these projects provide well-paying jobs with employment conditions designed to attract and retain a skilled and highly mobile workforce. This bill will not diminish this; rather, it should increase the availability of these jobs.
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The ACCI also reflected that while it has been possible since 2014 to make greenfields agreements in the face of union opposition—after six months or more of stalled negotiations—this approach had not yet been used.
The cost threshold for a major project
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A number of employee organisations raised concerns about the $250 million cost threshold for a major project. For example, Mr Duncalfe, Australian Workers' Union, argued that this definition could encompass projects as small as a shopping centre upgrade or the building of a residential tower.
Mr Duncalfe argued:
That is not a major project. Major projects are those where there is a national or a state interest in them and they can increase the number of quality jobs et cetera. So, the definition itself is just fraught …
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Mr Duncalfe also raised concerns that employers would be able to meet the threshold by including costs other than those related to construction of a project. This concern was shared by the CFMMEU – Construction & General and MUA divisions, which contended that the bill did not contain any mechanism for determining project value and did not require transparency.
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However, the department explained that the $250 million threshold was selected to balance concerns about long agreement periods with the economic and employment benefits that would flow from greater investment certainty. As an example, it cited the September 2020 Deloitte Access Economics’ Investment Monitor, which indicated that while there were 191 projects with a cost of at least $500 million, there were:
… an additional 132 projects with a cost of between $250 million and
$500 million, listed as ‘committed’, ‘under consideration’ and ‘possible’, with a total value estimated at $46.147 billion.
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The department also noted that the $250 million threshold would enable coverage of projects that could provide economic and job creation benefits, for example, in smaller or regional communities.
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In relation to other concerns about the $250 million threshold, the department drew attention to relevant safeguards in the bill. For example, when considering whether to approve a longer-term greenfields agreement, the FWC would need to be satisfied that the work performed under the agreement would relate only to the construction of a major project. The department argued that the bill would, therefore:
…ensure certainty for employers and employees by providing a safeguard against the use of these agreements in circumstances where the work to be performed is not related to the construction of major projects.
Compliance and enforcement
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While stakeholders presented a range of views on various aspects of the proposed compliance and enforcement provisions, the discussion below is focused on the provisions that attracted the most commentary:
the introduction of a new criminal offence for the dishonest and systematic underpayment of employees; and
the increase in the base maximum civil penalties for remuneration-related contraventions of the Fair Work Act.
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These provisions would establish a national criminal offence for the worst forms of wage underpayment, where an employer 'dishonestly engages in a systematic pattern of underpaying one or more employees'. An employer convicted under this offence would face a maximum penalty of $5.55 million. Individuals would face a maximum penalty of $1.11 million, four years imprisonment, or both. A person convicted of the criminal offence (or an ancillary offence) would also be automatically disqualified from managing corporations under the Corporations Act 2001 for a period of five years.
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A number of stakeholders supported these provisions. For example, the Restaurant and Catering Industry Association strongly supported the compliance and enforcement measures in the bill and indicated it could also be supportive of the proposed criminal offence.
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The NT Working Women's Centre also welcomed the changes:
We support criminal penalties for the dishonest and systematic pattern of underpayments, with imprisonment as a last resort for serious and repeat offenders.
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In supporting the provisions, the National Retail Association pointed to its consistent support for the criminalisation of wage non-compliance 'in circumstances where there was sufficient proof of deliberate or reckless intent'. Similarly, Legal Aid NSW welcomed 'an offence provision that targets cases where underpayment is both dishonest and part of a systematic pattern'.
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While it argued that penalties should be proportionate and applied appropriately, the NFF accepted that increased penalties, including criminal penalties in severe cases, were a factor in addressing underpayment or non-payment of wages. This view was also supported by the BCA, which did not oppose the idea of criminal sanctions for serious and deliberate breaches.
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However, these views were not shared by all stakeholders. Three of the more commonly cited concerns in relation to these provisions were the need for increased penalties, the role of award complexity in driving non-compliance, and the interaction of the provisions with existing state laws.
The need for increased penalties
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Some industry organisations disputed the need for increased penalties and raised concerns that the introduction of a criminal offence, along with higher civil penalties, was excessive and would not be effective in reducing reduce non-compliance.
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In response, the department pointed out that a number of recent inquiries had found that the current arrangements were not working well enough to deter underpayments or address non-compliant behaviour by employers, whether inadvertent or deliberate:
The Migrant Workers’ Taskforce, the Black Economy Taskforce and the Fair Work Ombudsman have all suggested tougher penalties would provide a more effective deterrence to ensure compliance with workplace laws.
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The department also noted that the penalties reflected:
…the Government’s policy that dishonest and systematic exploitative conduct is very serious, and a sufficient response to this requires a criminal offence to supplement the existing civil penalties regime for underpayments under the Fair Work Act.
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While advocating for increased penalties, the department stressed that the proposed threshold for criminal liability would be appropriately high.
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This threshold was also recognised by other submitters, including the National Retail Association, which noted that the proposed definition of 'dishonest' would establish intent, while the inclusion of the word 'systematic' would distinguish between genuine errors made by employers and deliberate, systematic patterns of non-compliance.
The role of award complexity in driving non-compliance
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A number of stakeholders highlighted the role award complexity played in driving non-compliance. For example, the Franchise Council of Australia noted the complexity of the system led to inadvertent non-compliance by employers. It suggested that higher levels of compliance could be achieved if the 'FWO took a greater role in assisting employers resolve uncertainty in how to interpret and apply specific awards'.
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This position was supported by the NFF, which argued that:
Efforts directed at simplification and education would be significantly more effective at improving compliance outcomes in the long-term than simply doubling down on punitive measures after the fact.
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Similarly, the Restaurant and Catering Industry Association asserted that:
…upskilling business operators is equally as important as upskilling employees when it comes to understanding out workplace laws. This is particularly true in light of the recent underpayment claims in the Fast Food, Restaurant and Café (FRAC) Sector.
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To this end, the department explained that a multilayered approach to non-compliance would be taken, including education and awareness initiatives to support voluntary compliance. It also highlighted the Australian Government's investment in the FWO (as the primary workplace regulator), which included more than $160 million in new funding since 2016:
This includes additional funding to establish an Employer Advisory Service from 1 July 2021, which will offer small business employers authoritative, written advice tailored to the employer and the individual circumstances of their employees, and more funding to improve the Fair Work Ombudsman’s visibility and education activities.
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The funding for these non-legislative measures was welcomed by the FWO, which underlined the role these measures would play in minimising non-compliance by raising awareness and providing better education services for small businesses.
Interaction with state laws
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A number of submitters raised concerns that the new provisions were not as strong as existing Victorian and Queensland wage theft laws, which would be nullified if the bill was passed. For example, the Victorian Trades Hall Council argued that:
…the proposed legislation remains a weak deterrent and ineffective in protecting workers from business models built on exploitation, underpayment and wage theft. The Victorian model on wage theft legislation is best practice that should be replicated at the federal level.
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The Victorian Government also opposed these provisions of the bill, in particular the intention to 'cover the field' by 'amending the definition of state or territory industrial law in the Fair Work Act to purportedly include Victoria’s wage theft offences'.
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However, while the Queensland Government retained some concerns about the bill's impact, it highlighted the need for a national approach:
Queensland believes that action by the Australian Government to rectify the serious issue of employer non-compliance and introduce tougher workplace laws to deal with wage theft and exploitative labour hire arrangements is long overdue. It is pleased to see the Australian Government is now legislating to strengthen the Fair Work regulatory framework, including the criminalisation of wage theft...
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The intention to 'cover the field' was unequivocally supported by other stakeholders, including the Pharmacy Guild of Australia and the Franchise Council of Australia, which argued that this would 'remove potential state-based differences and provide for a nationally consistent approach to workplace relations matters'.
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The BCA also strongly supported the exclusion of state laws and questioned whether Victoria and Queensland had the power to legislate in this area, given their referral of industrial relations powers to the Commonwealth. It argued that the bill would 'ensure that there is a single national system of enforcement for breaches of workplace laws'.
Fair Work Commission
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The bill would broaden the grounds on which the FWC could dismiss an unmeritorious application. It would also enable the FWC to prevent applicants (who had shown a pattern of initiating unmeritorious proceedings) from making a subsequent application without the permission of a FWC presidential member. The bill would also allow the FWC to correct inadvertent errors in decisions and provide it with greater discretion to deal with a matter on appeal 'on the papers', if it considers an oral hearing unnecessary.
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There was limited commentary on these provisions, which were broadly supported by a number of stakeholders. However, the ACTU raised concerns about the impact of these provisions, including on an individual's or organisation's access to justice.
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In advocating for the proposed amendments, the department highlighted the limited powers currently available to the FWC to deal with vexatious litigants:
In one example … an individual had lodged 10 applications that had been listed 26 times for conference, mention and/or hearing and for which the Fair Work Commission had issued a total of 11 decisions and 3 orders. In addition to taking up the Fair Work Commission’s time and resources, this also means that a respondent may be required to defend a repeated series of applications about the same incident.
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The department also pointed to the safeguards that would be implemented to ensure applicants have access to justice. It contended that these safeguards would appropriately balance procedural fairness for applicants with the FWC's ability to deal effectively with unmeritorious applications.
Committee View
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The committee would like to thank all stakeholders for their engagement in this inquiry process. The committee also acknowledges the significant contribution made by stakeholders during the extensive consultation process that informed the development of the proposed reforms.
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During the inquiry, the committee heard a range of arguments in relation to the specific provisions of the bill. Some provisions, such as the proposal to sunset agreements made before the start of the Fair Work Act and various aspects of the compliance and enforcement provisions, received general support from a range of stakeholders. Others were more contested, with a variety of competing evidence presented to the committee. This was particularly evident in relation to the proposed changes to casual conversion arrangements, longer-term greenfields agreements, and the better off overall test.
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Overall, the committee is encouraged by the broad support for the bill from those stakeholders who will be responsible for decisions around whether to hire workers and pay higher wages in coming months and years, and their confirmation that the measures in the bill will assist in delivering these outcomes. The committee is also encouraged by the feedback that the bill will deliver the flexibility required to support economic growth and job creation in the wake of the COVID-19 pandemic. At the same time, the committee is cognisant of the need to balance these flexibilities with protections for employees. The committee believes the bill gets this balance right.
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In relation to casual conversion arrangements, the committee acknowledges employee groups' concerns about the reasonable grounds upon which an employer can refuse to offer casual conversion. However, the committee understands that the proposed grounds are consistent with those in the existing FWC casual conversion model clause, as determined by the FWC following years of hearings and submissions. Accordingly, the committee accepts the department's contention that concerns about the casual conversion provisions are based largely on misconceptions about the bill.
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The committee also recognises the concerns raised by employer groups about the potential administrative burden of the conversion process. These concerns relate to both the requirement to make an offer, as well as the requirement to notify employees of decisions not to make an offer. However, the committee considers the casual conversion provisions ensure eligible employees are informed of their rights and given the opportunity to take up the new, universally accessible pathway to permanent employment should they wish to do so. The committee also heard evidence that suggests employer group concerns about the administrative burden of these provisions are not universal, with some stakeholders informing the committee that the package as a whole will deliver reductions in red tape.
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On reflection, the committee is persuaded that the casual employment provisions in the bill strikes an appropriate balance between enhancing employees' rights to convert to permanent employment and clarifying employer rights and obligations in relation to casual employment.
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As with the casual conversion provisions, the committee acknowledges there are mixed views on the proposal to allow the FWC to approve greenfields agreements of up to eight years. The committee heard claims from employee organisations that allowing longer-term agreements would strengthen the ability of employers to make non-union agreements and reduce their incentive to resolve issues that arise during the course of a project. Some stakeholders questioned the need for longer-term agreements entirely. However, the committee also heard evidence from employer groups that the current four-year limit on agreements was a risk to investment in major projects and noted the various safeguards built into existing greenfields agreements processes that are retained and added to through the measures in the bill.
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On balance—and particularly noting that eight years is a maximum, rather than a required term—the committee believes that this provision will deliver the industrial stability needed to secure investment in major projects. In turn, these projects will drive much needed employment and investment in local economies as the Australian economy rebounds from the impacts of COVID‑19.
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The committee is also not persuaded that the changes would impact negatively on employees. While mindful of stakeholder concerns, the committee is reassured by the department's evidence that greenfields agreements will still need to be negotiated with a union and that employees will retain the ability to resolve disputes that arise over the life of the agreement.
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In relation to concerns about the proposed changes to the BOOT, the committee notes that amendments to the bill were agreed in the House of Representatives on 23 February 2021. These amendments omit items 17 to 23 of Schedule 3 to the bill, which would have temporarily adapted the existing public interest exception in the Fair Work Act that allows the FWC to approve enterprise agreements that do not pass the BOOT to recognise the unique circumstances caused by COVID-19. The committee supports these amendments and makes no further comment on this aspect of the bill.
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The committee notes the part-time flexibility measures in the bill are designed to increase the use of permanent employees with paid leave entitlements (including sick leave) across the key sectors of hospitality and retail, and the improvements offered by the compliance and enforcement provisions are designed to protect employees’ entitlements and deter underpayments. Overall, the committee considers the bill to be a balanced and practical response to the identified challenges in Australia's industrial relations system. By addressing barriers to job creation, wages and economic growth while improving the framework to protect and recover employee entitlements, the committee believes the bill will deliver greater certainty and benefits for both employers and employees as Australia navigates its way out of the COVID-19 pandemic.
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The committee recommends the bill be passed.
Senator the Hon James McGrath
Chair