Overview of the Fair Work Act 2009 (Cth)

16.3 The Fair Work Act is the key piece of Commonwealth legislation regulating employment and workplace relations. 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.

16.4 The Fair Work Act establishes a safety net comprising: the NES, modern awards and national minimum wage orders; and a compliance and enforcement regime.[1] It also establishes an institutional framework for the administration of the system comprising FWA and the FWO. The Fair Work Divisions of the Federal Court and Federal Magistrates Court and, in some cases, state and territory courts, perform the judicial functions under the Fair Work Act.[2]

Background

16.5 The Fair Work Act was introduced into the House of Representatives in November 2008 and was given Royal Assent on 7 April 2009. Most provisions of the Act took effect on 1 July 2009, replacing the Workplace Relations Act 1996 (Cth).

16.6 The history surrounding the enactment of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), the Federal election campaign in 2007—including Forward with Fairness,[3] which preceded the Fair Work Act—and the introduction of the Fair Work Act, have been the subject of much debate and commentary.

16.7 The introduction of the Fair Work Act was the result of extensive consultation with stakeholders throughout the drafting process. There was also significant lobbying by various groups prior to its introduction, in particular unions and business groups, for changes to the proposed Act. The Government engaged in consultation with key non-government stakeholders, primarily through the:

  • National Workplace Relations Consultative Council and sub-committees;[4]
  • Business Advisory Group;[5]
  • Workers Advisory Group;[6] and
  • Small Business Working Group.[7]

16.8 The Government also conducted a number of other specific consultations in relation to the NES.[8]

Constitutional basis

16.9 Prior to 2006, the limitations inherent in the conciliation and arbitration power under s 51(xxxv) of the Australian Constitution, essentially led to a dual industrial relations system in Australia, in which the power to legislate with respect to industrial relations was one held by both Commonwealth and State governments.[9] According to Sir Anthony Mason, the limitations under s 51(xxxv) meant that there was a ‘dual (federal and state) system of arbitration and that it [had] unnecessary complexity and technicality’.[10]

16.10 However, the Work Choices legislation, and later the Fair Work Act, sought to rely on the corporations,[11] territory[12] and external affairs[13] powers under the Australian Constitution as well as a referral of power to the Commonwealth, in order to create, as far as possible, a new national industrial relations system.[14]

Coverage

16.11 The Fair Work Act regulates ‘national system’ employers and employees.[15] From 1 January 2010, all states other than Western Australia referred their industrial relations powers to the Commonwealth, essentially creating a new national industrial relations system.[16] As a result, the national system covers the Commonwealth, Commonwealth authorities and constitutional corporations,[17] as well as all other:

  • employment in Victoria, ACT and the Northern Territory;
  • private sector employment in New South Wales, Queensland and South Australia; and
  • private sector and local government employment in Tasmania.

16.12 The system does not cover:

  • state public sector or local government employment or employment by non-constitutional corporations in the private sector in Western Australia;
  • state public sector and local government employment in NSW, Queensland and South Australia; or
  • state public sector employment in Tasmania.

16.13 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.[18]

16.14 The Fair Work Regulations 2009 (Cth) address matters of detail within the framework established by the Fair Work Act. For example, the Regulations provide additional definitions, explain the application of the Act and elaborate on certain terms and conditions of employment.

Objects

16.15 Section 3 of the Fair Work Act contains the objects of the Act, as well as the manner in which the Act intends to achieve its specific objectives, which are to:

provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise‑level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium‑sized businesses.[19]

16.16 The objects reflect, on the one hand, the need to provide a legislative framework which is flexible for businesses and promotes productivity and economic growth and, on the other, the desire to ensure the framework is fair and protects the rights of employees to a guaranteed safety net, flexible working arrangements and fairness and representation at work.

16.17 Of particular importance in the context of this Inquiry is the incorporation of both references to, and actual entitlements based on, the concept of social inclusion. For example, the extension of parental leave and the right to request flexible working arrangements appear to indicate a commitment

to provide an opportunity for federal employees to improve the balance between their work and family life and thus support the social inclusion policy objective.[20]

16.18 The need for a balanced legislative framework is the main challenge faced by the ALRC in considering what improvements could be made to the Fair Work Act to protect the safety of those experiencing family violence. In light of the need for balance, the ALRC also recognises the need, in the context of considering proposed amendments to the Fair Work Act, to protect the safety of those experiencing family violence while, at the same time, ensuring proposals are consistent with the objects of the Act.

Review and amendment

16.19 In considering what improvements could be made to the Fair Work Act to protect employees experiencing family violence, the ALRC is of the view that some amendments to the Fair Work Act may be necessary.

16.20 However, in light of the relatively recent introduction of the Fair Work Act and the detailed consultation processes involved in enacting this legislation, in some areas the ALRC recognises there may be more appropriate processes and reviews into which the ALRC’s discussion of the issues faced by employees experiencing family violence may be incorporated. This Inquiry therefore provides an opportunity to identify relevant areas for consideration and the responses of stakeholders.

16.21 For example, within two years of the full implementation of the Fair Work Act—by 1 January 2012—the Australian Government has committed to commencing a Post-Implementation Review (PIR) of the Fair Work Act. The PIR will report on the regulatory impacts of the legislation and whether the Act is meeting its objectives.[21] The ALRC considers that many of the issues raised in this Discussion Paper could also be considered in the context of the PIR. In addition to the PIR, from 1 January 2012, there will be several reviews of modern awards, which will be discussed below.

[1] Part 4–1 of Fair Work Act 2009 (Cth) (Civil remedies).

[2] Part 4-2 of Ibid (Jurisdiction and powers of courts).

[3] See, eg, K Rudd and J Gillard, Forward with Fairness: Policy Implementation Plan (2007).

[4] Established by the National Workplace Relations Consultative Council Act 2002 (Cth). A tripartite body constituted by seven ACTU representatives and seven employer representatives which is chaired by the Deputy Prime Minister and meets every six months to consider workplace relations at a national level.

[5] Established in 2008 and constituted by representatives from a range of industries and sectors to discuss the Fair Work Bill 2008 (Cth): Explanatory Memorandum, Fair Work Bill 2008 (Cth).

[6] Established in 2008 and constituted by high-level union representatives to discuss the Fair Work Bill 2008 (Cth): Explanatory Memorandum, Fair Work Bill 2008 (Cth).

[7] Established in 2008 and constituted by small businesses, including peak small business organisations to advise in relation to the development of the Fair Dismissal Code: Explanatory Memorandum, Fair Work Bill 2008 (Cth).

[8] Ibid, vii, viii.

[9] Section 51(xxxv) of the Constitution allows the Commonwealth to make laws with respect to ‘conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one state’: Australian Constitution s 51(xxxv).

[10] A Mason, ‘The Australian Constitution 1901–1988’ (1988) 62 Australian Law Journal 752, 759.

[11] Section 51(xx) of the Constitution allows the Commonwealth to make laws with respect to foreign, trading or financial corporations: Australian Constitution s 51(xx).

[12] Section 122 of the Constitution allows the Commonwealth to make laws with respect to territories: Australian Constitution s 122.

[13] Section 51(xxix) of the Constitution allows the Commonwealth to make laws with respect to external affairs: Australian Constitution s 51(xxix).

[14] Section 51(xxxvii) of the Constitution allows the Commonwealth to make laws with respect to ‘matters referred to the Parliament of the Commonwealth’ by any state: Australian Constitution s 51(xxxvii). The states challenged the constitutional validity of the Work Choices legislation, however it was upheld by the High Court in New South Wales v Commonwealth (2006) 219 CLR 1.

[15] The definition of ‘national system employee’ and ‘national system employer’ are contained in ss 13 and 14 of the Fair Work Act 2009 (Cth) and are extended by ss 30C, 30D, 30M and 30N to cover employers in referring states: Fair Work Act 2009 (Cth) ss 13, 14, 30C, 30D, 30M and 30N.

[16] In 1996 Victoria was the first state to refer key industrial relations powers to the Commonwealth.

[17] Constitutional corporations are those to which the federal corporations power applies. The corporations power allows the Australian Parliament to make laws with respect to certain types of corporations: Australian Constitution s 51(xx).

[18] For example, non-national system employees are entitled to unpaid parental leave, notice of termination, payment in lieu or notice and protection from unlawful termination of employment: Fair Work Act 2009 (Cth) pts 6–3, 6–4.

[19] Ibid s 3.

[20] J Murray and R Owens, ‘The Safety Net: Labour Standards in the New Era’ in A Forsyth and A Stewart (eds), Fair Work: The New Workplace Laws and the Work Choices Legacy (2009) 40, 66.

[21] The Post-Implementation Review is consistent with the Government’s objective of improving the effectiveness and efficiency of regulation. The PIR was referred to in Explanatory Memorandum, Fair Work Bill 2008 (Cth), 360; and Department of Education, Employment and Workplace Relations, Agency Budget Statement 2011–2012 (2011) Outcome 5, 130.