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The Productivity Commission’s proposed changes to the Fair Work Act

Employment Law ChangesAugust 13, 2015

The Productivity Commission’s proposed changes to the Fair Work Act (Last Updated On: August 13, 2015)

Following on from our review of the Fair Work Act on Tuesday, the Productivity Commission (which is the Australian Government’s principal and advisory body for improvements in economic efficiency) has recently issued its draft report into Australia’s Relations Framework. This draft report addresses areas that have raised concerns amongst Australian businesses regarding the operation of the workplace relations system and its impact on their productivity.

The key recommendations are summarised below:

Restructure of the Fair Work Commission

The draft report proposes that the Fair Work Commission (FWC) be split into two separate units:

1) Minimum Standards Division – responsible for minimum wages and modern awards, consisting of appointees with experience in economics, social science, commerce or equivalent disciplines. The current Commission Members traditionally came from union backgrounds, employer association backgrounds or legal backgrounds and were unlikely to have any significant expertise in economics, social science, commerce or equivalent disciplines.

2) Tribunal Division – responsible for all other functions of the Commission which do not fall under minimum wages and modern award.

Penalty rates reform

The draft report recommends that penalty rates for employees in the cafe, restaurant, entertainment and retail sectors be made consistent across Saturdays and Sundays. The proposed penalty rate would be the current Saturday rate of 125%, removing Sunday penalty rates altogether.

If this was to take place (which would require legislative change) there would be a significant financial benefit to most employers in these industries. However, this recommendation is already being strongly opposed by unions and is not supported by the Federal Opposition.

Bargaining processes to focus on substance and flexibility

The draft report makes a number of recommendations in regards to the bargaining processes (or construction of Enterprise Bargaining Agreements).

The recommendation of an ‘Enterprise Contract’ would give smaller businesses in particular, greater scope to adapt agreements to their business needs, without the need to negotiate individually or at an enterprise level, and without requiring an employee ballot. The Enterprise Contract has already been labelled as the ‘revival of WorkChoices’ (name given to changes made to the federal industrial relations laws in Australia by the Howard Government in 2005) and is likely to become a hotly contested political issue, making any legislative change difficult to achieve.

Employers may be given a boost in industrial disputes

The draft report recommends amendments to industrial action provisions. This relates to the strategic use of aborted strikes and brief stoppages, aiming to provide employers with more cost effective ways of implementing contingency plans in response to this type of action.

Unfair dismissals and general protections claims to be tightened

 If implemented, these recommendations would assist employers by reducing unfair dismissal claims and minimising the associated cost. The draft recommends that the FWC consider unfair dismissal applications at submission stage rather than encouraging progression to mediation or court focused remedies.

The Productivity Commission also recommends that non–compliance of the Fair Work Act by an employer, should not always result in reinstatement or compensation of former employees.  There was also the recommendation that a limit to the amount of compensation that can be awarded for the breach of Fair Work Act be introduced.

The draft report provides employers with the hope that a range of legislation changes may be adopted, and addresses their concerns and confusion surrounding the Fair Work Act. We must note however, the recommendations are expected to be challenged by both the trade union movement and the Federal Opposition. A final decision will not be made until November 2015. Until then, please contact Employsure should you be unsure of any of your requirements under the Fair Work Act and Health and Safety Act.

If you wish to read the full overview of the draft report you can find it at:

Sourced via

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