Fair Work Act 2009 and it’s Implications for Churches and Non-Profit Entities

Pre-March 2006

Many church based organisations were within the State Industrial Relations system (with the exception of Victoria, ACT and NT)

 - State Industrial Relations Act;
 - State Awards;
 - State Industrial Relations Commission is the arbiter

March 2006

The Introduction of Workchoices

 - Only applicable to “Trading corporations” ( entities that engaged in substantial “trade or commerce”) and “Financial corporations”
 - This generally did not include churches, even if incorporated, as most churches derived the vast majority of their income from tithes and offerings.  They remained in the State jurisdiction
 -Schools and Bible Colleges were caught because they were generally “fee paying”
 - Care organisations needed to assess their “trading” activities

The “Trading Corporations” and “Financial Corporations” were forcibly removed from the State – Jurisdiction into the Commonwealth Jurisdiction

 - Workplace Relations Act 1996
 - Australian Fair Pay and Conditions Standard
 - State Awards become NAPSA’s (Notional Agreement Preserving a State Award) – with pay increases delivered by the Fair Pay Commission
 - Australian Industrial Relations Commission was the arbiter
 - For employers with less than 100 employees there was no ability to bring an application for unfair dismissal
 - removal of the “No disadvantage Test” (later replaced with the “Fairness Test”)

The importance of the Workchoices amendments cannot be underestimated, when considering the move to a national employment framework:

 - Radical shift in the primary constitutional underpinning for Federal workplace relations legislation from the “Conciliation and Arbitration of Interstate Industrial Disputes” power to the “Trading and Financial Corporations” power;
 - The upholding of this by a majority of the High Court, on appeal from each of the States;
 - Legislating 5 minimum Employment Standards; and
 - The intended rationalisation of Awards (which did not proceed to finalisation)

Peter Punch, CCH Australian Industrial Law News, 22 March 2010

2009

Fair Work Act 2009

 - Still only applicable to “Trading Corporations”, Victorian, ACT and NT employers and employees
 - National Employment Standards, to commence on 1 January 2010
 - Modern Awards drafted, to replace State Awards on 1 January 2010
 - Unfair Dismissal – application could now be made by any employee (provided they had completed 6 months employment, or 12 months if the employer employs less then 15 people)

1 January 2010

 - Queensland, NSW and South Australia refers industrial relations to the Commonwealth
 - States have the power to refer any matter to the Commonwealth, but can reserve certain rights in the referral (generally government and local government employees have been retained in the state systems).
 - All non-Government employers and employees now within the Commonwealth employment framework.
 - WA remain outside of the Commonwealth employment framework (with the exception of “Trading and Financial Corporations”)
 - The greatest effect of the change is on small, unincorporated businesses (partnerships, sole traders etc) and non-profit charitable bodies.
 - As a result, unless you are a WA employer, you are now caught by the Fair Work Act 2009

How the referral operates from 1 January 2010:

 - State Awards and Agreements become National Federal Awards and Agreements.
 - However, National Federal Awards only apply for a period of 12 months, and then cease to apply (from which time, the Modern Award will apply);
 - The National Employment Standards will apply, where more favourable then the Award or Agreement
 - There are transitional arrangements for increasing/decreasing rates of pay to meet the Modern Award – these are built into the Modern Award.

What’s next?

Tony Abbot has indicated the following changes if there is a change in government:

 - A return to “individual workplace agreements”; and
 - Changes to unfair dismissal for small business.

The Fair Work Act 2009

National Employment Standards (minimum standards that must be met)

Maximum weekly hours

 - 38 hours per week plus reasonable additional hours (an employee can refuse to work unreasonable additional hours)

 - “Reasonable Additional Hours” is not defined, but the following considerations apply when considering if hours are unreasonable:

• any risk to employee health and safety from working the additional hours;
• the employee’s personal circumstances, including family responsibilities;
• the needs of the workplace or enterprise in which the employee is employed;
• whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
• any notice given by the employer of any request or requirement to work the additional hours;
• any notice given by the employee of his or her intention to refuse to work the additional hours;
• the usual patterns of work in the industry, or the part of an industry, in which the employee works;
• the nature of the employee’s role, and the employee’s level of responsibility;
• whether the additional hours are in accordance with averaging terms included under section 63 in a modern award or enterprise agreement that applies to the employee, or with an averaging arrangement agreed to by the employer and employee under section 64;
• any other relevant matter.

- A Modern Award can allow for the hours to be averaged over a period of time

MacPherson v Coal & Allied Mining Services Ltd [2009] FMCA 881 (9 September 2009)

 - Mine moving from a three week rotating roster of 40 hours per week to a 44 hour week comprising of 3 x 12 hour shifts and an 8 hour shift.

 - MacPherson alleged that the additional hours were unreasonable, as they interfered with his family obligations (coaching his son’s football team and not being able to be home for dinner).

 - FMC noted that:

• The new rosters had real advantages for the employer, which justified significant capital investment and ensured the preservation of jobs;
• The shifts were all day shifts, and no weekend work was required;
• The employer had consulted with the workforce about the proposed changes;
• The employer had made a genuine attempt to address concerns; and
• Only a small number of employees were disgruntled.

When weighing this against the impact on Mr MacPherson’s family life, the additional hours were not unreasonable.

The right to work flexible working arrangements

 - Employee who has the responsibility for the care of a child under school age

 - Must have been employed for at least 12 months

 - Can only be refused on reasonable business grounds

 ”Reasonable Business Grounds” is not defined.  The Explanatory Memorandum indicates that relevant factors would include:

• The effect on the workplace and the employer’s business, including the financial impact as well as the impact of efficiency, productivity and customer service
• The inability to organise work among existing staff
• The inability to recruit a replacement employee
• the practicality or otherwise of the arrangements that may need to be put in place to accommodate the employee’s request
• If the employer rejects the request, reasons must be given in writing
• An employee cannot challenge the “reasonableness” of the decision, by seeking a review through Fair Work Australia (a breach of the provision is not a civil penalty offence – section 44).

However, State and Territory anti-discrimination laws are not overridden by the Fair Work Act 2009.  The employee could still allege discrimination on the grounds of sex or family responsibilities, under the State and Territory legislation.

For example, a failure to consider the employee for alternative positions (for which the employee is qualified) may be discriminatory.

However, there is, in my view, no obligation on the employer to create a position for the employee (in fact, such would amount to “unreasonable business grounds”).

Parental leave and related entitlements

 - 12 months unpaid parental leave
 - Can be extended for a further 12 months (employer can refuse the extension on “reasonable business grounds” (noting our comment above on the definition of “reasonable business grounds”)
 - As for “flexible working arrangements”, an employee cannot challenge the “reasonableness” of the decision, by seeking a review through Fair Work Australia (a breach of the provision is not a civil penalty offence – section 44).  However, a complaint of discrimination may still be available (although in my view it would be more difficult to prove the complaint).

Note that this Standard applies to all employees and employers (not just “national system employees and employers”) – that is, WA employers and employees are caught.  This is because this particular standard is based on an International Convention to which Australia is a signatory (i.e. are based upon the “External Affairs” power in the Commonwealth Constitution).

Annual Leave

 - 4 weeks per year (5 weeks for shift workers)

Note that, if an employee is sick whilst on Annual Leave, they can use their personal/carer’s leave, rather than their annual leave entitlements

Personal/carer’s leave and compassionate leave

 - 10 days of paid leave per year
- Illness of the employee or
- Need to care or support a member of the employee’s immediate family or household

Unpaid carer’s leave

- 2 days of unpaid leave on each occasion
 - Only available if paid carer’s leave is not available

Compassionate leave

 - 2 days per occasion
 - Member of the employee’s immediate family or household – personal illness or injury that poses a serious threat to his/her life or dies
 - Paid at base rate

Community Service Leave

 - Jury Service
 - Emergency Management Activity (i.e. SES) (the employee’s absence must be reasonable in all the circumstances)
 - For Jury Service, the first 10 days must be paid by the Employer, less the amount paid to the employee by the Court

Long Service Leave

 - Generally as per pre-reform Agreements or Awards.

Public Holidays

 - Specific days listed
 - Employee is entitled to be absent
 - Employee can be required to work if the request is reasonable

A range of issues must be taken into account in determining what is “reasonable”

Notice of termination and redundancy payment

 - Minimum period of notice must be given (no change to these periods)
 - Redundancy payment stipulated (up to 16 weeks pay)

Note that the Standard for the payment of notice applies to all employees and employers (not just “national system employees and employers”) – that is, WA employers and employees are caught.  This is because this particular standard is based on an International Convention to which Australia is a signatory (i.e. are based upon the “External Affairs” power in the Commonwealth Constitution).

Provision of a Fair Work Information Statement

 - Must be given to all new employees
 - Details their rights and entitlements

Applying the National Employment Standards

 - The NES apply from 1 January 2010 to all employees
 - Breaching the NES is a civil penalty offence – which can be investigated by Fair Work Australia/Fair Work Ombudsman, and penalised.
 - Where a transitional instrument applies (Award or Agreement), then to the extent that a term of the transitional instrument is detrimental to an employee when compared to the equivalent provision in the NES, then the provision in the instrument will have no effect, and the provision in the NES will apply.
 - This effectively requires a “line by line” analysis, with employees having the best parts of the transitional instrument and the NES.
 - It is not possible to argue that other provisions in the transitional instrument are more favourable, and therefore should cancel out the NES.
 - The obligation is on the employer to conduct the “line by line” analysis, so as to ensure that employees are not being disadvantaged.

Modern Awards

 - Modern Awards have been created by the AIRC
 - These Awards build on the National Employment Standards, but cannot erode the Standards
 - They are tailored to the needs of a particular industry or occupation – industry/occupation specific
 - Launched on 1 January 2010 (but for employers who have been referred (non Trading and Financial Corporations, the Modern Awards will not commence until 1 January 2011).

 - Address issues such as:

• Minimum wages
• Types of employment
• Hours of work;
• Overtime and penalty rates
• Allowances
• Leave
• Superannuation
• Dispute resolution

 - They do not cover high income employees ($100,000 per annum plus)

 - Phasing in of salary and allowance increases/decreases (but note that an employee can seek an order from FWA if their pay is decreasing):

• 20% per year from 1 July 2010

Modern Awards of potential relevance for non-profit entities:

• Aged Care Award 2010
• Clerks – Private Sector Award 2010
• Higher Education Industry – Academic Staff – Award 2010
• Higher Education Industry – General Staff – Award 2010
• Children Services Award 2010
• Social, Community, Home Care and Disability Services Award 2010

               > Crisis assistance and supported housing

              >  Social and community services

              > Home care

              > Family day care

• Miscellaneous Award 2010

             > The “catch all” Award

Verbal advice from Fair Work Australia is that this Award would not apply to Pastors, as they are not traditionally covered by Awards

 - Flexibility Agreements can be entered into with specific employees.  They must be in writing, and specify which provisions of the Award will not apply (i.e. overtime, allowances etc).  However:

• The agreement must be voluntary, without coercion or duress;
• The employee must be “better of overall” under the terms of the flexible agreement; and
• It can be terminated by either party on 4 weeks written notice.

Unfair Dismissal

 - Unfair Dismissal applications can now be made by all employees (the exemption for employers of less than 100 employees has been removed).
 - The employee must have completed 6 months employment, or 12 months if the employer employs less then 15 people.  This is often more generous than “probation” provisions.

Time Limit to bring the application

 - The application must be lodged with 14 days after the dismissal takes effect.
 - However, FWA can extend the time limit if exceptional circumstances exist.  An exhaustive list of factors to take into account include:

• the reason for the delay;
• whether the person first became aware of the dismissal after it had taken effect;
• any action taken by the person to dispute the dismissal;
• prejudice to the employer (including prejudice caused by the delay);
• the merits of the application; and
• fairness as between the person and other persons in a similar position.

 - In recent decisions, FWA have indicated a reluctance to extend the time limit, noting that:

• The move to “exceptional circumstances” and the shortening of the time period (from 21 days to 14 days) indicates that the legislature expects the time limit to be adhered to;
• For a circumstance to be exceptional, if need not be unique or unprecedented or very rare, but it cannot be one that is regularly, or routinely, or normally encountered. (Parker v Department of Human Services [2009] FWA 1638)
• Where the lateness of the application is due to a factor outside of the employee’s control (i.e. slow mail, problems with on-line lodgement), this will usually be seen as exceptional circumstances.
• However, ignorance of the time limit, or not knowing that an application could be made is often no excuse.
• Applications have been refused when the out-of-time period is as little as 2 days.
• This is a strong argument for employers to make in responding to an application, as they are often lodged outside of the 14 day period of time.

Genuine Redundancy

 - A “genuine redundancy” is a defence to an application for unfair dismissal.
 - A dismissal will be a genuine dismissal if:

• The employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise (note that it is the “job” (that is, the particular functions, duties and responsibilities of the position) that is important – see Ulan Coal Mines Ltd v Howarth and Others [2010] FWAFB 3488);
• The employer has complied with any obligation in a Modern Award or Enterprise Agreement to consult about the redundancy; and
• It would not have been reasonable in all of the circumstances for the person to be redeployed with the employer’s enterprise (or the enterprise of an associated entity).

 - The Explanatory Memorandum gives the following examples:

• A machine is now available to do the job performed by the employee;
• The employer’s business is experiencing a downturn, and fewer employees are required to the task or job; or
• The employer is restructuring their business to improve efficiency, and the tasks to be done by a particular employee are distributed between several other employees, and there the person’s job no longer exists.

 - If you are considering making a position redundant, early advice is essential, to determine if:

• It is a genuine redundancy;
• That consultation obligations are complies with;
• To consider any redeployment obligations; and
• To determine if redundancy pay is payable.

Small Business Fair Dismissal Code

 - Commenced on 1 July 2009
 - Applies to small business employers (less than 15 employees, including employees in associated entities)
 - If the dismissal complies with the Code, the employee will be consider to have not been unfairly dismissed.
 - The Code can be obtained on the FWA website.  It includes the following:

• Summary dismissal can apply where the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
• In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
• In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
• The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
• The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
• In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
• A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

Note that compliance with the entire Code must be demonstrated.  In this regard, FWA has recently held that the Checklist is of “dubious value”, as it does not accurately reflect the steps required to ensure strict compliance (in that matter, although the employer folliowed the Checklist, it did not advise the employee of his right to have a support person at a meeting (this was not included in the Checklist).  Despite compliance with the checklist, the employer failed to comply with the Code, and the dismissal was Harsh (N v The Bakery [2010] FWA 3096).

Record Keeping

 - Employers must keep the records prescribed under the Fair Work Regulations 2009:

• Basic employment details  (name and nature of employment)
• Pay
• Overtime hours
• Averaging arrangements
• Leave entitlements
• Superannuation contributions
• Termination of employment
• Individual flexibility arrangements and guarantees of annual earnings
• Pay slips must include:

             > Employer’s name
             > Employee’s name
             > Period for payment
             > The date of payment
             > Gross and net payment
             > Any bonus, loading, allowance, penalties, incentives or other entitlement
             > The ABN of the employer.

 - The records must be properly maintained, legible (in English) and readily accessible to an inspector
 - The records must be kept for 7 years
 - Employees are entitled to inspect their records
 - Inspectors can inspect and copy any employee record.
 - Failure to comply can result in infringement notices ($330 per contravention for an individual, $1650 for a body corporate)

Agreement Making under the Fair Work Act 2009

General Principles

 - Now only “Single Enterprise” or “Multi-Enterprise” Agreements (no longer “Union” and “Non-Union” Agreements)
 - Unions can be a party to the Agreement if they are appointed as a bargaining agent.  This will enable a Union to enforce the Agreement
 - Agreement can only contain any matters pertaining to the relationship between:

• The employer and employee;
• The employer and any Union
• Any other terms are void and unenforceable

 - The Agreement must include the following terms (failing which, model terms will apply):

• a dispute resolution clause that enables either Fair Work Australia or an independent party to settle any disputes.
• A nominal expiry date
• Individual flexibility arrangements between employee and employer
• Consultation on major workplace change

 - The Agreement must not contain unlawful content/terms:

• Discriminatory
• Breach unlawful termination/freedom of association laws
• Require the payment of a bargaining services fee to a Union
• Provide remedies for unlawful termination for persons who have not served the minimum probation periods
• Provide for right of entry that is inconsistent with right of entry laws
• Purport to authorise industrial action during the life of the Agreement

 - Approval by Fair Work Australia

• “Better off overall” test – in comparison to the relevant Modern Award
• Agreement will only commence following approval

Good Faith Bargaining – Obligations of the parties

 - Attend meetings
 - Disclose relevant information
 - Give genuine consideration and respond to proposals
 - Refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining
 - However, a party is not required to make concessions or sign an Agreement to which it does not agree.
 - If a party is not bargaining in “good faith”, Fair Work Australia can intervene.