As of 1 January 2010, the Fair Work system came into full effect, pursuant to the Fair Work Act 2009 (Cth) (“Fair Work Act”). Private sector employers and employees in New South Wales, Queensland, South Australia and Tasmania who were covered by State workplace relations systems, will now be covered by the Fair Work system.
The previous “Work Choices” system provided five basic entitlements for employees, being annual leave, personal / carers leave, parental leave, maximum ordinary hours of work and basic rates of pay and casual loadings. The new Fair Work system intends to create a “safety net” for employees in two ways, the first through the introduction of National Employment Standards, and the second by way of consolidation of various award schemes.
The National Employment Standards (“NES”) consist of 10 minimum standards of employment. In summary, they are as follows:
The NES apply to all employees (except casual employees in some circumstances) under the national workplace relations system.
The second aspect of the “safety net” for employees which the Fair Work system has implemented is known as “Modern Awards”. Existing awards have been consolidated by the Australian Industrial Relations Commission (AIRC) into industry or occupation based awards. Modern awards will apply to employees and employers under the national workplace relations system. Managers or high income earners [employees with guaranteed annual earning of more than $100,000.00 (pro rata for part-time employees)] need not be covered by a modern award. High income earners are free to negotiate terms with their employer to supplement the NES without reference to an award. A review of each award will be undertaken by Fair Work Australia every four years, with the first review set to take place in 2014.
Modern Awards would include terms and conditions on minimum wages, rest breaks, overtime and penalty rates, leave and allowances. The introduction of Modern Awards means that many people’s minimum entitlements have been changed. For more information on modern awards, visit: www.airc.gov.au/awardmod/about.htm.
The Fair Work system has also established new laws in relation to the unfair dismissal of employees. Unfair dismissal will occur if Fair Work Australia is satisfied that a person has been dismissed harshly, unjustly or unreasonably, provided that the dismissal was not a case of genuine redundancy. Employees can make an unfair dismissal application if they are covered by the national workplace relations system. If not, remedies may be sought under State legislation. Casual employees will be unable to make an unfair dismissal claim, unless they are engaged regularly and systematically by the employer, and hold a reasonable expectation that their employment would be ongoing. Unfair dismissal claims should generally be lodged with Fair Work Australia within 14 days of the dismissal.
Currently, “small business” is defined as businesses with fewer than 15 fulltime employees. From 1 January 2011, a small business will be defined as a business employing fewer than 15 employees using a headcount (not based on fulltime status).
Employees will only be able to make an unfair dismissal claim if they have been employed for a minimum period of 12 months by a small business owner (as opposed to only 6 months for larger businesses).
For small businesses, unfair dismissal can occur if the dismissal is not consistent with the Small Business Fair Dismissal Code (“the Code”). The Code sets out circumstances in which a dismissal without notice is allowed (in cases of theft, fraud and violence). The Code also sets out the actions that should be taken by a small business owner when dismissing underperforming employees. Reasons of why the employee is at risk of being dismissed must be provided, followed by giving the employee a reasonable chance to rectify their underperformance. The warning does not necessarily have to made in writing but it would be preferable. Multiple warnings are not necessary.
Unlawful termination occurs when an employee is dismissed for reasons including: race, colour, sex, sexual preference, age, marital status, religion and political opinion. It is also unlawful for an employer to terminate employment of an employee owing to temporary absence from work because of illness or injury. An employee who believes they have been unlawfully terminated needs to apply to Fair Work Australia within 60 days of the termination.
During the transition period of the implementation of the new Fair Work system, the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) seeks to address the following issues:
Comasters can help clients, who are either employers or employees, in employment issues including the drafting of employment contracts and solving disputes.
© Comasters March 2010.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.