Before Work Relations Act 1996 was established, Australia used the separate State and federal systems as the industrial relations system. The States used their own laws and regulations. However, it is too complex and difficult to solve industry relation problems such setting employee contracts, if it involves several States (Dabscheck 2006, p.83). Then, Howard government established Work Relations Act as a single national industrial relations system, and reformed the Workplace Relation Amendment (Work Choices) Act in2005. Work Choices was regard as a major shift in setting employment conditions, it involved many aspects to protect employees and employers’ right, such Work Choice set, unfair dismissal access limited, and agreement-making process (Louw ed 2007, p.1). However, the defects of Work Choice caused some people lose their rights. In 2009, the Federal Government’s new Fair Work regulations replaced the Howard government’s Work Choices. The new regulation is called the Fair Work Act 2009, and it is legislation which covers the National employment. The Fair Work Act provided in Fair Work Australia (2009) has the main purpose as to provide a balanced framework for cooperative and productive workplace relations. There are two significant components in the new system which include; modern awards and new Nation Employment Standards (NES).
Fair Work has led to many changes in details and aspects from Work Choice. These changes are terms and conditions of employment, and rights of employees and employers. In the essay discussions will be made on the minimum legislative standards, agreements and unfair dismissal of Work Choice and Fair Work 2009, and forces on comparing and contrasting the differences for three features.
Minimum Legislative Standards and Awards
The first feature is about minimum legislative standards and reward system. According to Goman (2008), minimum standard is to guarantee a minimum standard of living for unskilled workers. Then, Fair Work Act (2009) defined that award is instrument made by Australian Industrial Relations Commission (AIRC) containing the terms and conditions of employment. Wage and reward are important part of employment conditions. This is due to the fact that they are part of incentives and motivations for people getting jobs. Therefore, both Work Choice and Fair work force on changes of minimum standards and reward system are crucial.
Old federal system in Australian does not have minimum wages and conditions of employment, but it has the notion of a safety net of minimum wages. Under old system, awards provided an underpinning or safety net which is a floor for enterprise agreement (Louw Ed 2007, p.6). However, Work Choice removed ‘no-disadvantage test’, and set the minimum standard. Work Choice prescribed that AIRC did not have power to set the minimum standards while Australian Fair Pay Commission (AFPC) was only commission which has strictly limited power to create new award (Fenwick 2006). AFPC was charged with the responsibility of guaranteeing basic hourly rates of pay, establishing the Federal Minimum Wage (FMW), and setting up the award system. Furthermore, Work Choice has five minimum conditions of employment which includes minimum wage rates, annual leave, parental leave, personal/career’s leave, and maximum ordinary hours of work (Louw Ed 2007, p.5). Work Choice prescribed that agreements have the force of law. When employees and employers make an agreement, they should comply with Australian Fair Pay and Conditions Standard and compliance with the statutory standards (Punch 2006, p.7).
AFPC established and varied minimum wage every year. AFPC (2008) reported that the minimum wage of employees rose from $12.75 in 2005 to $14.21 in 2008. The minimum wage continued to rise, but there are debates in minimum wage laws. Most people supported that the minimum wage laws protect workers. Without minimum wage, the adults who currently work for minimum wage are likely to lose their jobs to teenagers who work for fewer wages (Messerli 2011). However, some authors and economists argued that the minimum wage law has negative impact. Peetz (2007) believed that the minimum wage which is established by Work Choice have caused a decline in the real wage for most award-reliant and low wage workers. In Gaman (2008) opinion, ‘the minimum wage laws cause unnecessary hardship for the very people they are supposed to help’, and it is difficult for low-skilled workers or unskilled youth people to find jobs. Furthermore, Fair work 2009 continues to use minimum wage laws, and there is still a debate whether the minimum should be abolished or not.
The minimum legislative standards are one of main changes in Fair Work 2009. First, Fair Work Australia is a new statutory body which has replaced a number of Work Choice institutions. The Minimum Wage Panel within FWA replaced the AIRC to set and vary minimum wages for national employees (Louw 2010, p.86). Then, Fair work 2009 creates 10 new National Employment Standards (NES). The NES covers five condition of employee’s entitlement in Work Choice, and plus requests for flexible working arrangements, community service leave, long service leave, public holiday, notice of termination and redundancy pay and fair work information sheet (Bray et. al 2009, p. 11). Furthermore, the new NES has reformed the 38 maximum hours’ which are considered as standard for part time workers, expands the parental leave entitlements in that employees have the right to request for an additional 12 months unpaid leave, and provides a right to a flexible working arrangement for employees who has a pre-school aged child. The several terms, such the flexible working arrangement and additional parental leave, show that Fair Work Act is designed to promote a balance between work and family.
FW Act has created Modern Awards which replaced federal awards and Notional Agreements Preserving State Awards (NAPSAs). Modern awards set minimum terms for employees in particular occupation, and it can be regarded as ancillary and supplementary terms to incorporate the NES (Bray et. al 2009, p. 17). The flexibility provision of Modern Awards allows employers and employees to negotiate changes to meet their needs.
The Fair Work Act 2009 provides stronger rights for workers to negotiate their wages, conditions and workplace, and ‘set out minimum entitlements for all workers that can not be taken away under any circumstances’ (ACTU 2010). Work Choice has shortage for its minimum standards; sometimes it can not cover all things sine some people lose their rights. For example, Work Choice lack guarantee of minimum hours or of maximum hours. The working hours may exceed 38 hours, because the overtime and penalty rates removed and all hours rendered ‘ordinary’ (Hartman& Darab 2007). However, Fair work reformed the maximum working hours’ standard, it set that 38 hours is maximum weekly hours of work. According to this standard, employees can refuse overtime and avoid weekly excessive.
In short, both Modern Awards and new NES which are provided in Fair Work 2009 supplement and reform the shortage and the defect of Work Choice. They provide a fair and relevant minimum safety net. The debates of minimum wage still exist. However, the government chooses to set the minimum wage, it should continue to reform the terms and conditions of minimum to reduce the negative impact from minimum wage.
This part is workplace agreement for Work Choice and Fair Work 2009. First, Work Choice had significant changes for agreement-making. It abolished the no disadvantage test, and changed termination of agreements. Before Work Choice Act was created, collective agreements could not commence operation until they had been certified by the Australian Industrial Relations Commission (Louw 2007, p.15). Under Work Choice, agreements are already there on the workplace authority, and they can commence operation immediately. Work Choice set six types of workplace agreements which include; Australia workplace agreement (AWA), employee collective, union collective, multi-business, employer Greenfields, and union Greenfields agreements (Grayden 2010, p.9). According to Dabscheck (2006), ‘an AWA takes precedence over a collective agreement and a workplace agreement over an award.’
However, Cooney (2006) maintain that the remedies available for workplace agreements are quite narrow. Under Work Choice Act, if one party breaches the workplace agreement or refuses to comply with an obligation agreement, the other party can seek a remedy through the courts. But all of these remedies focus on pecuniary compensation, and ignore to whether important non- monetary entitlements in agreements are complied with or not. Most remedies under the Fair Work Act are same as under Work Choice. Therefore, the courts should pay more attention on non-pecuniary entitlements and compensation, when they decide the remedies available for workplace agreement.
Fair Work Act forced on collective than individual bargaining and abolished the distinction between union and non-union agreement. Union will not be parties to agreements, unless the Greenfields agreement (Grayden 2010, p.9). Fair work Australia (2009) created enterprise agreement and defined that ‘An enterprise agreement is made at the enterprise level and provides terms and conditions for those national system employees to whom it applies.’ Enterprise agreement can be designed and tailored specifically for particular enterprises and workplace, and have terms that supplement to the NESs. Employers and employees may involve good faith bargaining requirement which is new introduced by Fair Work Act, when they bargain for enterprise agreement. However, new enterprise agreements cause public debates. Some people argued that the bargaining made more difficult by the Fair Work Act, and enterprise agreements have become more difficult to negotiate. Then, the new bargaining also caused more time to making enterprise agreement such as devoting more hours to enterprise bargaining and negotiating with bargaining representative (AMMA 2010).
The last feature is comparison between unfair dismissal provided in Work Choice and that provided in Fair Work Act. According to Louw ed. (2007, p.19), unfair dismissal means that employer dismiss employee in a harsh, unjust or unreasonable condition. Under old federal system, unfair dismissal protections existed to protect employee. Work Choices changed dismissal laws, reduced the rights of many workers to access the unfair dismissal jurisdiction, and declined the protections from previous federal law.
The new exclusion categories, which Work Choices set to the federal unfair dismissal regime, raise the public debates. Under Work Choices, there are several exclusions that employees can not apply unfair dismissal. Employees working for employers with 100 or less employees can not bring a claim, when they are faced with harsh, unjust or unreasonable employer behaviors which lead to their termination (Grayden 2010, p.12). It means that a majority of workers have lost their right to unfair dismissal protection unless their organizations have more than 100 employees. Some people argued that the employers with more than 100 employees can effectively avoid unfair dismissal law through restructuring their workforces to build subsidiary companies with less 100 employees (Chapman 2006). The exemption of small business arose much dissatisfaction from employees who are employed in company with less 100 employees and faced unfair dismissal. Small workplace which are exempt from the unfair dismissal laws increase employees’ anxiety about job security (Peetz 2007)
People had continued to argue the exclusion in Work Choice, until Fair Work started. Fair Work Act removed the exemption for small business with less than 100 employees in Work Choice. Under Fair Work, employees gain the right to bring an unfair dismissal claim to employers with small business, if they have worked for a minimum employment period.
Under Work Choice Act, the employees who have been employed for period of fewer six months are prevented from bringing an unfair dismissal claim. Six months of service was the qualifying period. Employee can gain their rights for unfair dismissal laws only if they have completed qualifying periods (Coulthard 2007, p.15). Fair Work Act adds the qualifying period for small business. If employees are employed by organization with 15 or less full-time equivalent employees, they are eligible to apply application for unfair dismissal after completed one-year employment (Fair Work Australia 2009). Bray et. al. (2009, p. 20) maintained that Fair Work Act 2009 removes the blanket exemption of Work Choice about small enterprises with 100 or fewer employees. After Fair Work Act changed, the entitlements for applying unfair dismissal laws become broader and more flexible. More people who work in small business can claim unfair dismissal terminations.
Furthermore, Work Choice set ‘high income threshold’ which is $98,200 per year. It means that employees with ‘high income threshold’ cannot apply unfair dismissal application Fair Work Act (Coulthard 2007, p.17). Fair Work Australia increases the threshold of high income to $108,300. The majority of employees earn less than $108,300, but minority of employees who earn more than ‘high income threshold’ can not access to unfair dismissal jurisdiction (Fair Work Australia 2009).
Unfair dismissal protection was used by employees who made redundant before Work Choice started. However, Work Choice exempted operational reasons from unfair dismissal laws. Chapman (2006) defined that operational reasons are the reasons of economic, technological, structural or similar natures, which link their employer’s undertaking, establishment, service or business. Under Work Choice, employee can not apply unfair dismissal, if their employment was terminated for genuine operational reasons (Coulthard 2007, p.16). Some authors such Chapman (2006) and Coulthard (2007) argued that the unfairly selection occur in selecting redundancy ahead. For example, sometimes the retrenched employees faced unfair dismissal; the severance benefits for them were below the industrial norm (Chapman 2006).
Fair Work Act abolished the genuine operational reasons exclusion, it still defend that genuine redundancy exempt the unfair dismissal laws. Fair Work Act created the Small Business Fair Dismissal Code to replace operational reasons (Barton, 2010, p.91). If small business employers complied with obligations set out in an applicable award or enterprise agreement, they are protected from an unfair dismissal claim (Grayden 2010, p.12). It means that the retrenched employees with less severance benefits can apply an unfair dismissal claim. However, unfair selection for redundancy ahead still exists under Fair Work Act.
Without exemptions in Work Choice, employees could lodge an unfair dismissal application within 21days of the dismissal coming into effect (Barton 2010, p.93). However, Fair Work reduced the days for lodging an unfair dismissal remedy application from 21 days to 14 days. Only exceptional circumstances, Fair Work Act may accept a late application (Fair Work Australia 2009).
In short, Fair Work Act reforms the shortage of Work Choice. One of big changes for Fair Work Act is that it pays more attention on small business. Then, Fair Work abolished the exemption of operational reason, increased ‘high income threshold ’, and reduced the time limit for bringing an unfair dismissal claim.
Fair Work Act has changed lots of details in Work Choice. It cannot be denied that Fair Work Act provide more rights to all employees, and provide rights to people who lost their rights under Work Choice. First, Modern Awards and new NES supplement and reform the shortage and the defect of Work Choice. Some details of new NEs and Modern Awards are quiet hommization. Fair Work Act tried to promote balance between family and work, such as additional 12 months unpaid leave, and a flexible working arrangement. Fair Work Act still set minimum wage which rise debates whether abolished minimum wage or not. Furthermore, Fair Work Act created enterprise agreement, and good faith bargaining. But the people showed that new agreements have become more difficult to negotiate. The big change of Fair Work Act is about unfair dismissal. Under Work Choice, the unfair termination is unlikely to meet the needs of all eligible workers. Fair Work Act provides right to employees in the small business, and creates Small Business Fair Code to protect employer who compiled the code. Though Fair Work Act it removes disadvantage of Work choice, the debates still exists under Fair Work Act such unfair selection for redundancy ahead. However, Fair Work Act still can be regards as representing a dramatic shift in Australian industrial relations legislation.
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