The new IR landscape

Our industrial relations laws are changing, creating traps for the unwary. So it’s worth taking the time to do your homework.

The Federal Government is overhauling the industrial relations system, changing the former government’s Work Choices laws.

Employers can't enter into new AWAs with the passing of the Workplace Relations Amendment Act - a transitional regime until 2010 when a new system called Fair Work Australia begins.

Until then, employers can enter Individual Transitional Employment Agreements for new employees at companies that used AWAs before December 1, 2007, and for employees previously on AWAs.

• The changes at a glance
• Unfair dismissal changes
• What do you need to do?

 

The changes at a glance

• No new AWAs. Existing AWAs will operate until their expiry date, subject to the fairness test which ensures fair compensation if the AWA removes or modifies protected conditions like penalty rates and overtime loadings.
• Transitional Agreements. Employers who had at least one AWA at 1 December 2007 can use the Individual Transitional Employment Agreement (ITEA), subject to a no-disadvantage test to prevent a reduction in an employee’s terms and conditions of employment. The test applies to ITEAs made after 28 March 2008.
• Award modernisation. The Australian Industrial Relations Commission will undertake an award modernisation process, based around 10 National Employment Standards due for completion by 31 December 2009.
• Salary threshold for common law agreements. More flexible common law agreements will be available by 2010 for employees earning more than $100,000 or for people employed in a role “not traditionally covered by an award”.

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Unfair dismissal changes
Changes to unfair dismissal laws are expected exposing more small businesses to unfair dismissal claims.

The Government hasn't released final details of any legislative changes, but has proposed:

• Employees will be able to bring unfair dismissal claims against businesses with more than 15 employees after six months service.
• Small businesses with 15 or fewer employees can be subject to unfair dismissal claims after employees have worked in the business for 12 months.
• From 2010, a new body, Fair Work Australia, will handle unfair dismissal claims, using a less formal, legalistic process than the existing Industrial Relations Commission, reducing costs for employers defending claims, but making it easier for employees to launch claims.

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What do you need to do?
According to Adrienne Unkovich, Managing Director of Workforce Guardian, small businesses need to answer five critical questions:

1. Do you have written employment contracts?
2. Are they well drafted?
3. Do your contracts comply with current legislation?
4. Are your employment contracts up to date? If an employee’s role changes you need to draw up a new contract.
5. Do you have policies making it clear that serious misconduct will result in dismissal?

Unkovich advises business owners to put everything in writing so they have documentary evidence if an employee makes an unfair dismissal claim.

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Where to find out more

• Commonwealth Australian Workplace information
• Commonwealth Workplace Authority
• Industrial Relations Commission
• Workplace Ombudsman

 

• Important information
  As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. All products mentioned on this web page are issued by the Commonwealth Bank of Australia; view our Financial Services Guide (PDF 59kb)