26 August 2020

Federal Government Industrial Relations Reform

The Prime Minister and Attorney General and Industrial Relations Minister, Christian Porter, have announced a major industrial relations reform agenda which will see proposed changes to enterprise agreements and awards. The Federal Government will introduce the reforms as part of the JobMaker plan, with details to be outlined in the lead up to the October 2020 Budget. The proposed reforms include changes to: • Greenfield Agreements • Enterprise Agreements • Casual and fixed-term employees • Compliance and enforcement • Award simplification The Federal Government has established five working groups to focus on areas of predetermined “specific known problems” in the industrial relations system, with Attorney General Christian Porter outlining “the problems within each of the five areas we have chosen to focus on are well known and I am confident that if we can work cooperatively, an opportunity exists to make meaningful progress at developing solutions that will make a significant difference to how quickly we can recover from this crisis.” Reform agenda The majority of meetings will be conducted during July with the intention of concluding the process at the beginning of September for actioning via legislation, regulation, and in the October Federal Budget. On 27 May, Attorney General Christian Porter indicated the process would “result in legislation” by the end of the year. Greenfield agreements for new projects Attorney General Christian Porter has outlined there will be a focus on establishing enterprise agreements for the life of mining, oil and gas projects, which have traditionally been limited by the “structure of the system”. The Federal Government has expressed support for new deals that lock in pay rates and prevent legal industrial action for the life of new projects. The working group convened to examine greenfield agreements for new projects will consist of five members from employee associations and five members from employer associations, and it is reported that proposed legislation in this area is already “well developed”. The working group will also be tasked with facilitating consultation with stakeholders with a view to progressing a pipeline of investments for job creation. Enterprise agreements making In proposing reform to enterprise agreements, Attorney General Christian Porter has indicated the Government will examine the Better Off Overall Test (BOOT), suggesting ‘‘the BOOT test is something that needs to have a really, really fine look at because the way it’s being applied at the moment is causing fewer and fewer enterprise agreements to be concluded.” The Better Off Overall Test has previously been highlighted as an area in need of reform by key business and industry groups, who advocate for it to be replaced with the formerly used No Disadvantage Test. The Australian Council of Trade Unions has indicated they are open to examining lowering requirements of the Better Off Overall Test when agreed to by unions and employers. Federal Labor Shadow Minister for Industrial Relations Tony Burke said in May that Labor would oppose scrapping the BOOT because it would not improve wage growth. Casual and fixed-term employees Attorney General Christian Porter stated in May there was a “strong argument” to extend the right of casuals who have worked regular shifts for 12 months to request permanent employment. These comments come as industry groups have called on the Federal Government to change the definition of a casual employee to avoid large backpay claims arising from the Workpac v Skene decision entitling some casual employees to leave and other entitlements. Attorney General Christian Porter indicated the working group would be “looking at a range of known problems” including “problems associated with the definition of casual employment”. Compliance and enforcement The Federal Government has reportedly drafted a bill to criminalise serious forms of wage theft. The working group established to examine compliance and enforcement will examine options including banning directors from boards of those companies which underpay workers, stopping the company from employing migrant workers, and displaying a notice about the company’s breach. Unions have indicated they believe the Federal Government may set the bar too high for a “serious” form of wage theft. Award simplification The Federal Government has proposed to introduce award simplification changes, with an initial focus on simplifying a small number of awards in “distressed industries” as a result of COVID- 19. Attorney General Christian Porter has named these industries as retail, hospitality, restaurants and tourism. Key sector input The Australia Industry Group has called for the modification and simplification of modern awards to remove matters and conditions that are dealt with in legislation such as leave, notice of termination, dispute resolution processes, flexibility agreements and redundancy payments. Specifically, on enterprise agreements, AIG has called for: • The Better Off Overall Test to be replaced with the formerly used No Disadvantage Test • New objectives for the agreement approval process to avoid delays to agreements • The prevention of unions from engaging on the approval process unless they have affected members • Simplified explanation processes of new agreements to employers prior to votes. Secretary of the Australian Council of Trade Unions, Sally McManus, has confirmed the unions will move to block and stop industrial relations changes that are not in the interest of working people. On enterprise agreements, the ACTU will: • Seek an approval process with less process for new agreements • Modification to lower requirements of the Better Off Overall Test when agreed to by unions and employers • Industry and enterprise level bargaining for smaller businesses. Working groups On 3 June, the industrial relations reform working groups met for the first time for an economic briefing from Treasury officials and government officials on the scale of the sector-by-sector challenge faced to create jobs and chart a path to economic recovery. Unions and employers will reportedly be required to submit proposed industrial relations changes for scrutiny by senior Treasury officials, who will “stress test” them for productivity benefits, costs to the economy and job creation. Each working group will consist of a maximum of 15 members who will be able to call on predetermined industry and subject experts throughout the process. All working groups will be chaired by the Attorney General and Deputy Chair Tim Marney, a former Secretary of the Western Australian Treasury. Staff from Treasury and Finance will form a secretariat and will analyse proposals from working groups on the basis of productivity benefits, costs to the economy and job creation potential. On 12 June, Attorney General Christian Porter announced the membership of each of these working groups:

Working group Employer organisations Unions Casuals and fixed term Australian Chamber of Commerce and Australian Council of Trade Unions employees Industry (ACCI), Ai Group, Council of (ACTU), National Tertiary Education Small Business Associations of Australia Union (NTEU), Australian Nursing and (COSBOA), Australian Retailers Midwifery Federation (ANMF), United Association (ARA), Australian Higher Workers Union (UWU), Health Services Education Industrial Association Union (HSU) Award simplification ACCI, Ai Group, COSBOA, Australian ACTU (2 reps), UWU, Australian Workers Hotels Association (AHA), National Retail Union (AWU), Shop Distributive and Association (NRA) Allied Employees Association (SDA)

Enterprise Agreement ACCI, Ai Group, AMMA Australian ACTU, SDA, Community and Public Making Resources and Energy Group, Business Sector Union (CPSU), Transport Workers Council of Australia (BCA), Master Union (TWU), Electrical Trades Union Builders Australia (MBA) (ETU) Compliance and ACCI, Ai Group, National Farmers ACTU (2 reps), Finance Sector Union enforcement Federation (NFF), COSBOA, AHA (FSU), Australian Services Union (ASU), Independent Education Union (IEU)

Greenfields ACCI, AMMA, Minerals Council of ACTU, Construction Forestry Mining Agreements Australia (MCA), Australian Constructors Maritime and Energy Union (CFMMEU), Association (ACA), MBA AWU, Australian Manufacturing Workers Union (AMWU), ETU Emergency measure removed On 11 June, Attorney General Christian Porter reversed a Fair Work Regulation that allowed employers to provide just 24 hours notice to proposed changes to an Enterprise Bargaining Agreement. Following a review by Attorney General’s Department, the reversal returns the notice period to seven days. Announcing this change, Porter said the “emergency measure” was no longer required and that “this was only ever intended to be an immediate, temporary measure.” The Federal Court was due to deliver its verdict on a challenge to the Regulation by the Construction, Forestry, Maritime, Mining and Energy Union this week. On the same day, the Federal Government also formally discharged the Ensuring Integrity Bill from the Senate notice paper, after Labor put forward a motion to Parliament.

Flexible IR arrangements On 26 August, Federal Treasurer Josh Frydenberg introduced an Amendment Bill to Parliament that would extend the JobKeeper scheme until March 2021. That Bill would also amendment the JobKeeper provisions of the Fair Work Act made earlier in the year to temporarily provide employers flexibility whilst the pandemic is managed, and to meet the aim of the JobKeeper scheme in maintaining the employment relationship between the employee and employer. The amendments, Part 6-4C of the Fair Work Act, will allow eligible JobKeeper businesses to utilise flexible arrangement and create a new category of employer, legacy employers, for businesses that have previously received JobKeeper, are no long eligible for JobKeeper but are able to certify a 10 per cent reduction in turnover. Legacy employers would have access to modified flexibility arrangements, also referred to as JobKeeper enabled directions. Flexible arrangement in place and proposed to be extended are: • Employees may direct a change in duties, location of work, days and hours worked • Legacy employers must provide 7 days’ notice of a JobKeeper enabled direction rather than 3 days and have further consultation requirements • Employees cannot work less than 2 hours in a day • Employees on reduced hours may request secondary employment, or undertake professional development/ training • Stand down orders, including zero hours when the criteria is met • Legacy employers may reduce hours to 60 per cent of an employee’s ordinary hours • Employers must not remunerate an employee less than the base hour rate despite any JobKeeper enabled direction on duties or hours worked • Fair Work Commission may, by arbitration, resolve disputes • Employers from 28 September may no longer request employees agree to take Annual Leave until two weeks of annual leave remain, and may no longer also agree to take annual leave at half pay All employers must still meet their full obligations under the Fair Work Act to pay wages in full and any applicable penalties. Additional penalties of $13,200 for individuals and $66,600 for body corporates that are found to have misused legacy employer status would apply. Labor sought to amend the Bill to note the Treasurer has the power to set the rate and eligibility of the JobKeeper scheme and called on the Treasurer to utilise powers under the Act to tailor the JobKeeper program to the conditions of the economy. Labor had earlier announced that if their amendments were opposed by the Government they would allow the Amendment Bill to pass through the Parliament unamended.