The Fair Work Act 2009 (Cth)

2.43 The Fair Work Act is one of the key Commonwealth statutes governing the employment of mature age workers. It provides for terms and conditions of employment and sets out the rights and responsibilities of employees, employers and employee organisations in relation to that employment.

2.44 The Fair Work Act regulates ‘national system’ employers and employees.^[51] Employment that is not covered under the national industrial relations system remains regulated by the relevant state industrial relations systems. However, some entitlements under the Fair Work Act extend to non-national system employees.^[52] The Act also creates a compliance and enforcement regime and establishes several bodies to administer the Act, including Fair Work Australia (FWA) and the FWO.

2.45 There are a number of aspects of the Fair Work Act that present potential opportunities to address legal barriers to participation by mature age workers and in relation to which the ALRC makes proposals. These include:

• the right to request flexible working arrangements;
• modern awards;
• provisions relating to notice of termination of employment; and
• the general protections provisions.

Relevant reviews and research

2.46 In December 2011, the Australian Government announced a review of the Fair Work Act (the Fair Work Act Review),^[53] to examine and report on the extent to which the legislation is operating as intended and areas where the operation of the legislation could be improved consistent with the objects of the Act. In August 2012, the Australian Government released the Fair Work Act Review Panel’s Final Report. The Government is currently considering its response. The Fair Work Act Review was the subject of much controversy and attracted submissions from a wide range of stakeholders. Although the Fair Work Act Review found that the effects of the Fair Work Act ‘have been broadly consistent with the objects’ of the Act and that it is ‘operating broadly as intended’, there were 53 recommendations for reform. The key recommendations of relevance to this Inquiry relate to the right to request flexible working arrangements, and a number of changes to the operation of individual flexibility arrangements and the general protections provisions.^[54]

2.47 Under the Fair Work Act, the General Manager of FWA is required to provide a number of research reports, including on: developments in enterprise agreement making; the use and content of individual flexibility arrangements; and the operation of the National Employment Standards (NES) relating to employee requests for flexible working arrangements.^[55] The reports are due to be submitted to the Minister by 24 November 2012.

Flexible working arrangements

2.48 The Consultative Forum on Mature Age Participation has emphasised that the ‘ability to work part-time or flexible hours has been found to be the most important facilitator, after good health, for older people to work beyond retirement age’.^[56] Examining legislative mechanisms for ensuring access to flexible working arrangements is vital to encouraging mature age workers to enter, re-enter or remain in the workforce. The Advisory Panel on the Economic Potential of Senior Australians commented that mature age persons have ‘diverse requirements for flexibility’:

some want part-time work; some want casual work; and some want to work for blocks of time, take leave and return to work … Others wish to scale-down and work fewer hours, allowing more time for recreation. Many find it difficult to work full-time, standard hours because of their health, caring responsibilities or other specific circumstances.^[57]

2.49 Increasingly, there are a range of government and industry initiatives and reports focused on developing and implementing flexible work arrangements as standard business practice.^[58]

2.50 The key legal, as opposed to policy-based, mechanism which currently provides access to flexible working arrangements is the right to request flexible working arrangement provisions under the NES. However, the ALRC is also interested in stakeholder feedback about ways, other than through changes to the Fair Work Act, that the Australian Government should develop or encourage flexible working arrangements for mature age workers.

The right to request flexible working arrangements

2.51 The NES enshrine ten statutory minimum requirements that apply to all ‘national system’ employees. The NES encompass areas such as working hours and arrangements, leave, and termination and redundancy pay. The NES cannot be excluded by an enterprise agreement or modern award.^[59]

2.52 The NES were introduced following significant consultation^[60] to provide a ‘safety net which is fair for employers and employees and supports productive workplaces’.^[61] The NES replaced the Australian Fair Pay and Conditions Standard (AFPCS)^[62] and many of the entitlements under the AFPCS and then NES arise from a long history of test cases.^[63] As a result, amendment to the NES would have a wide-ranging impact on the entitlements of mature age workers and involve a significant change to the Fair Work Act framework.

2.53 Under the NES, an employee who satisfies the service requirements,^[64] who is a parent or otherwise has responsibility for a child who is under school age, or who is under 18 and has a disability, may request that his or her employer change his or her working arrangements to assist with the care of that child.^[65] Such a request may only be refused on ‘reasonable business grounds’.^[66]

2.54 FWA’s 2011 survey in relation to provisions under the NES found that 3.8 % of employers surveyed had considered a request for flexible working arrangement by an employee to care for a child, and that 0.9 % of employees surveyed had made such a request.^[67]

Extending the right to request

2.55 The key concern expressed by stakeholders, with respect to the current provision and its effect on mature age workers, is limited eligibility to request flexible working arrangements.^[68] While other systemic concerns with the provision have been discussed and addressed in the course of the Fair Work Act Review,^[69] the focus of the ALRC in this Inquiry is concerns about eligibility.

2.56 As outlined above, flexible working arrangements are vital for mature age workers. For example, mature age workers may request such arrangements to adjust working hours to accommodate caring responsibilities, allowing them to prolong workforce participation.

2.57 In many workplaces, both employers and employees work cooperatively to address the needs of employees, including through flexible working arrangements. Under existing arrangements, while employees are able to request flexible working arrangements outside the scope of the NES, they are not entitled to a response or reasons for refusal.^[70]

2.58 While in its current formulation the right to request flexible working arrangements is based on parental or child-care related responsibilities, potentially the section could be extended to include other bases upon which an employee could request flexible arrangements.

2.59 Notably, the UK right to request scheme, upon which the Australian provisions were based, has been incrementally extended. It applies to parents and carers of children up to the age of 16 and those with caring responsibilities for a wide range of adults requiring care, including: relatives, spouses, civil partners and other household members.^[71]

2.60 A number of bodies and reports have recommended the extension of the Australian provision. For example, the Fair Work Act Review Panel recommended that, in order to increase workplace equity and remove current inequities, s 65 should be amended to ‘extend the right to request flexible working arrangements to a wider range of caring and other circumstances’.^[72] The Australian Government is currently consulting on possible expansion of the right to those with caring responsibilities more generally,^[73] and the House of Representatives Standing Committee on Family, Community, Housing and Youth recommended in 2009 that the right to request be extended to all employees ‘who have recognised care responsibilities, including to those who are caring for adults with disabilities, mental illness, chronic illness or who are frail aged’.^[74]

2.61 The Advisory Panel on the Economic Potential of Senior Australians recommended that the right be extended to persons aged 55 and over.^[75] In February 2012, Adam Bandt MP introduced the Fair Work Amendment (Better Work/Life Balance) Bill 2012, which would, among other things, amend the Fair Work Act by extending the right to request to all employees and remove the flexible working arrangements provisions from the NES and create a new part of the Act.^[76]

2.62 Despite some support for such an expansion, peak industry bodies such as the Australian Chamber of Commerce and Industry (ACCI) have expressed strong opposition to the extension of the right to request flexible working arrangements provisions.^[77]

2.63 In the ALRC’s view, amendment of the NES to extend the right to request in this context is an important reform that balances one of the key objects of the Fair Work Act, which is to help employees balance their work and family responsibilities by providing flexible working arrangements, with the need to encourage workforce participation by mature age workers. It may also reduce the need for mature age workers to seek casual employment to achieve flexibility, or rely solely on the goodwill of their particular employer to access flexible working arrangements and provide statutory basis for such requests.

2.64 There are a number of possible approaches to extension of the right to request provisions in this context. The first is an extension of the right to request to all employees. However, a proposal of this nature might be seen as beyond the ALRC’s Terms of Reference. The second possible approach is an extension of the right to request to mature age workers. The ALRC considers that this narrow extension may contribute to discrimination against mature age workers and further entrench negative stereotypes about this group, for example by acting as a disincentive for employers to engage mature age workers. The third potential approach, in line with the submissions and recommendations outlined above, would be to extend the right to request to all employees who have caring responsibilities.

2.65 In the ALRC’s view the third approach is the most appropriate for a number of reasons. Australian Bureau of Statistics (ABS) figures indicate that the likelihood of a person providing care to someone else increases with age and that the majority of carers in Australia are aged 45 years and over.^[78] As a result, mature age workers would predominantly benefit by an extension of the right to request to employees with caring responsibilities. Such an extension would provide mature age workers with the right to request flexible working arrangements to accommodate their caring responsibilities, and in light of the often gendered nature of caring, such a reform is of particular importance to mature age women. The ALRC therefore proposes that the Australian Government extend the right to request flexible working arrangements to all employees who have caring responsibilities.

2.66 In addition, the ALRC proposes that the FWO develop a guide to requesting, considering and implementing flexible working arrangements, in consultation with unions, employer organisations and seniors organisations. The guide should include information about circumstances in which employees might seek such arrangements and give employers guidance on accommodating requests and include model flexibility strategies.

Individual flexibility arrangements

2.67 Section 202 of the Fair Work Act requires that every enterprise agreement must include a ‘flexibility term’, allowing the employer and the employee to make a specific ‘individual flexibility arrangement’ (IFA) that would vary the effect of the enterprise agreement to account for the employee’s particular circumstances.^[79] Therefore, under every enterprise agreement a mature age worker is entitled to negotiate an IFA with the employer, for example, to vary work arrangements.

2.68 Similarly, modern awards must include a ‘flexibility term’, allowing the employer and the employee to make a specific IFA to vary the effect of the enterprise agreement to account for the employee’s particular circumstances.^[80] Mature age workers are therefore entitled to negotiate IFAs with their employer under modern awards, for example, to vary their work arrangements.

2.69 There is limited data available about the use of IFAs since the introduction of the Fair Work Act. The Fair Work Act Review noted that a 2011 survey by FWA indicated that of the employers surveyed,

six percent had used IFAs, although more than a third of these entities had only made one such arrangement. Around 3.5 per cent of employees surveyed had entered into an IFA.^[81]

2.70 This finding was consistent with observations in submissions to this Inquiry. For example, JobWatch stated that it was ‘not aware of any older workers who have negotiated (or attempted to negotiate) IFAs under an enterprise agreement or modern award’.^[82]

2.71 Stakeholder responses to questions about the use of IFAs and, in particular, the reasons for limited use of IFAs, were mixed.^[83] However, in light of the limited use of IFAs and the systemic nature of any reforms aimed at IFAs, the ALRC does not consider it is appropriate to make any proposals with respect to IFAs. The ALRC notes that the Fair Work Act Review Panel gave the issue of IFAs ‘extensive consideration’ and made a number of recommendations on their operation under both enterprise agreements and modern awards.^[84]

Modern awards

2.72 A modern award is an industrial instrument that regulates the minimum terms and conditions for a particular industry or occupation in addition to the statutory minimum outlined by the NES.^[85] A modern award cannot exclude any provisions of the NES, but can provide additional detail in relation to the operation of an NES entitlement. The Fair Work Act prescribes terms which must, must not, or may, be included in a modern award.^[86] Under the Fair Work Act, a national system employee who is not covered by an enterprise agreement^[87] and is not a ‘high income employee’^[88] may be covered by a modern award.^[89] In general, a modern award applies to employees in a particular industry or occupation and is used as the benchmark for assessing enterprise agreements before they are approved by FWA.

2.73 FWA is currently undertaking a review of all modern awards, based on applications to vary modern awards, as part of a range of reviews required under the Fair Work Act and associated legislation.^[90] The scope of its current review is limited to considering whether modern awards achieve the modern awards objectives and are operating effectively, without anomalies or technical problems arising from the award modernisation process. The modern award review is unlikely to revisit issues already determined during the award modernisation process unless there are cogent reasons, such as where there has been a significant change in circumstances.^[91]

2.74 In addition, the Fair Work Act provides for review of each modern award every four years.^[92] The first review of this kind will commence in 2014, and FWA has indicated that it will be broader in scope than the 2012 review.^[93] The reviews are ‘the principal way in which a modern award is maintained as a fair and relevant safety net of terms and conditions’.^[94]

2.75 ACCI submitted that ‘the Productivity Commission should conduct research or be specifically requested to inquire, into the effects of certain award terms and conditions on mature age workers, including the impact of minimum wages’.^[95] In the ALRC’s view, the legislatively mandated FWA review processes present the appropriate mechanism for FWA to consider issues relating to mature age workers in the context of modern awards. Importantly, in conducting the review, FWA is required to take into account the need to respect and value the diversity of the workforce by helping to prevent and eliminate discrimination on the basis of, among other attributes, age.^[96]

2.76 Stakeholders raised a number of issues that could be considered in the course of the review. For example, an issue raised by the Government of South Australia was the inclusion of Graduated Retirement Provisions, which would

offer a voluntary option for persons who have reached a certain age to access a number of flexible working arrangements that meet their needs. The provisions should provide a range of graduated retirement options that would be most suited to the needs of the industry, the employer and the worker. The graduated retirement provisions should specify an age at which a worker may access these provisions, and this age should reflect the occupational requirements of modern awards for each industry or profession.^[97]

2.77 The submission further explained that Graduated Retirement Provisions could assist in workforce planning processes and ‘provide the platform for conversation about how the experienced employee could best contribute to the workplace’.^[98]

2.78 The Australian Council of Trade Unions (ACTU) suggested a suite of amendments to modern awards, primarily for the benefit of part-time workers, including:

access to part-time employment options, greater employee control over rosters and greater certainty over hours of work which assisted many older workers to transition to reduced hours of work.^[99]

2.79 Finally, ACCI suggested that three hour minimum shift requirements in awards can

impact mature age employees, who wish to work for less than the required minimum shift requirement (ie only want to work as a casual for 1 hour on certain days and not for 3 hours for each shift—the employer must pay for three hours, regardless of the amount of work available and whether the employer only operates at certain hours).^[100]

2.80 In light of the issues outlined above, the ALRC proposes that in the course of the 2014 FWA review, the inclusion or modification of terms to encourage the participation of mature age workers should be considered. The ALRC considers that s 139(1) of the Fair Work Act is sufficiently broad to allow scope for the inclusion of any such additional terms as required.

Notice of termination of employment

2.81 The NES establish the minimum period of notice, or payment in lieu of notice, that an employer must give an employee to terminate their employment without reasonable cause.^[101] The amount of notice or payment in lieu of notice is determined according to the employee’s period of continuous service with the employer.^[102] However, that period is increased by one week for employees over age 45 who have completed at least two years continuous service.^[103]

2.82 Evidence suggests that, of those experiencing age discrimination, the largest proportion of that discrimination constitutes having their employment terminated or being made redundant before their younger counterparts.^[104] JobWatch identified that mature age workers ‘are often the first target when businesses restructure and downsize’ and highlighted that in some cases ‘redundancy was used as a means of removing the [mature age worker] from their job in order to replace them with younger workers’.^[105]

2.83 Statistics from the ABS indicate that unemployed mature age persons are more likely to be long-term unemployed than their younger counterparts. For example, in 2010–11, 33% of unemployed people aged 45–64 were long-term unemployed, compared to 22% of the total unemployed.^[106] Further, mature age job seekers registered with Job Services Australia aged 55 years and over experience an average duration of unemployment of 73 weeks compared to 37 weeks for job seekers aged 25–44.^[107]

2.84 The Employment Law Centre of WA (ELCWA) suggested that the ‘minimum additional entitlement to notice for older employees be increased to reflect the greater difficulty that an older worker may encounter in finding alternative employment’.^[108] ELCWA also proposed ‘removing the requirement that a worker over the age of 45 years complete a minimum period of service prior to qualifying for this additional notice entitlement’.^[109]

2.85 In order to provide incentives for employers to retain mature age workers the ALRC proposes that the minimum additional period of notice for employees over age 45 should be four weeks. However, the ALRC is conscious of concerns that additional rights and entitlements for mature age workers may have unintended consequences by making them less attractive to employers and welcomes stakeholder feedback on this proposal.

General protections

2.86 The general protections provisions provide statutory protection for mature age workers seeking to challenge discriminatory treatment. The general nature and operation of the general protections provisions was considered in detail in the course of the Fair Work Act Review.^[110] In addition, the High Court of Australia provided greater clarity about the operation of the general protections provisions in a recent decision concerning determination of the reason for the relevant conduct in a general protections claim.^[111] Rather than considering the operation of the provisions in any detail, the ALRC’s focus in this Inquiry is, therefore, on the interaction between the general protections provisions and anti-discrimination legislation.

Legislative framework

2.87 Under the Fair Work Act, national system employees are entitled to a range of general workplace protections.^[112] These general protections, among other things, prohibit an employer from taking ‘adverse action’ against an employee or prospective employee on the basis of the employee having, exercising or not exercising, or proposing to exercise or not exercise, a ‘workplace right’, or to prevent the exercise of a ‘workplace right’.^[113] Measures that may constitute ‘adverse action’ taken by an employer against an employee include dismissal, injury or discrimination, or, in the case of a prospective employee, refusing to employ or discriminating in the terms or conditions of offer,^[114] and threatening any of the above.^[115]

2.88 The Fair Work Act prohibits specific forms of ‘adverse action’ being taken for discriminatory reasons and outlines a number of grounds of discrimination.^[116] Age is specifically listed as a protected attribute upon which a mature age worker may be able to pursue a claim of discrimination under the general protections provisions.^[117]

2.89 The general protections provisions provide statutory protection and may, therefore, provide greater security and an incentive for mature age workers to remain in the workforce. However, it is difficult to evaluate the effectiveness of the general protections provisions with respect to mature age job seekers and workers ‘in the absence of information as to the number of matters brought and the outcomes’.^[118]

2.90 While stakeholders identified a range of difficulties with the current general protections provisions,^[119] many expressed the view that the provisions are ‘sufficiently comprehensive and effective in providing an avenue for mature age workers to pursue if they have been discriminated against on the basis of age’.^[120]

Interaction with anti-discrimination legislation

2.91 The introduction of general protections provisions in the Fair Work Act provides employees with an additional choice of forum for complaints of discrimination; and that choice ‘can be a complex exercise’.^[121] Some commentators and stakeholders have suggested that the general protections provisions may provide a more useful avenue for redress in circumstances of age discrimination in the employment context than state or federal anti-discrimination legislation.^[122]

2.92 The key advantages of these provisions from the perspective of mature age workers seeking to challenge discriminatory treatment include: broad coverage, encompassing recruitment; the reverse onus of proof; that the unlawful or discriminatory reason only needs to be one of the reasons for the adverse action; cost implications; the role of the FWO; and the availability of injunctive relief .^[123]

2.93 Legal Aid Victoria submitted that, in addition to providing a ‘more effective avenue for recourse than other anti-discrimination legislation’, the provisions represent ‘a progressive solution to a problematic feature of other Australian anti-discrimination legislation’.^[124]

2.94 The value of the general protections provisions is highlighted in the following case study:

2.95 The Fair Work Act Review Panel acknowledged that ‘there is substantial overlap’ between the discrimination provisions in the Fair Work Act and other Commonwealth anti-discrimination laws.^[126] This issue is being considered in the context of the consolidation of Commonwealth anti-discrimination law. In the discussion paper for the consolidation project, the Government asked ‘should the consolidation bill make any improvements to the existing mechanisms in Commonwealth anti-discrimination laws for managing the interactions with the Fair Work Act?’^[127]

2.96 The Law Council submitted that the consolidation project ‘provides the opportunity to minimise this duplication and promote clarity and consistency for complainants and respondents seeking to navigate these regimes’.^[128]

2.97 The ALRC is interested in the approach taken by the Government to the issue of overlap and duplication with anti-discrimination legislation and will consider the draft consolidated anti-discrimination legislation upon its release. The ALRC is also interested in stakeholder comment on what ways, if any, Commonwealth anti-discrimination legislation or the Fair Work Act could be amended to improve or clarify their interaction in circumstances of age discrimination.