The Fair Work Act 2009 (Cth) is an act of the Parliament of Australia, passed by the Rudd government to reform the industrial relations system of Australia. Replacing the Howard government's WorkChoices legislation, the Act established Fair Work Australia, later renamed the Fair Work Commission.
As the core piece of Australian labour law legislation, it provides for terms and conditions of employment, and also sets out the rights and responsibilities of parties to that employment.
The Act established a safety net consisting of a national set of employment standards, national minimum wage orders, and a compliance and enforcement regime.Fair Work Act 2009 (Cth) Part 4–1. It also establishes an institutional framework for the administration of the system comprising the Fair Work Commission and the Fair Work Ombudsman, 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 Act.
The Act is the foundation of Australia's industrial relations legal framework, thought to be one of the most complex in the world.
Background
The Howard government introduced WorkChoices in November 2005, these changes later credited a significant contributor to the defeat of the Coalition and installation of a Labor government committed to repealing the reforms.Woodward, Dennis, 'WorkChoices and Howard's Defeat' (2010) 69(3) Australian Journal of Public Administration. Joe Hockey, some days after his government lost power, described WorkChoices as "dead".
Introduced in 2008, the Act was explained as creating 'a national workplace relations system that is fair to working people, flexible for business and promotes productivity and economic growth'.
The then Minister for Employment and Workplace Relations, Julia Gillard was responsible for the Act's eventual implementation. Prior to taking office in 2007, Gillard had been responsible as party spokeswoman on industrial relations for negotiating with unions in drafting the Australian Labor Party's policy on industrial relations. This policy was formalised in April 2007 through Forward with Fairness, detailing 'Labor's plan for fairer and more productive Australian workplaces.Gillard stated in a speech to the Australian Labor Law Association her ambition was to 'establish long-term stability in [the Australian industrial] relations system'. Beginning with the Industrial Relations Act 1988, the preceding two decades had been a prolonged period of repeated and substantial change to the Australian industrial landscape. The system following the passing of the Act was the first Australian labour law regime to last a full ten years in operation since the conciliation and arbitration model which characterised Australian industrial relations for much of the previous century.
A senior member of the Fair Work Commission acknowledged in 2014 that Australia's workplace laws are complex, often requiring specialist legal advice.Applicant v Respondent FWC 2860. Gillard has stated a fairer system meant 'in most cases lawyers [would not] be necessary', however under the reform, employers and employees are seeing an increasing risk of litigation and complexity, leading to increased involvement of lawyers.
The Act
Collective bargaining Collective bargaining is a mechanism which allows employees, employers and representational parties to express their objectives with respect to work.Sheldon, P. (2008). What collective bargaining future for Australia? Lessons from international experience. In J. Riley and P. Sheldon (eds), Remaking Australian Industrial Relations (pp. 235–48). Such bargaining was at the centre of the Australian Labor Party's industrial relations policy. As noted by Woodward, modern awards would provide the 'floor' of entitlements, the base from which further conditions could be bargained. The Act enables bargains to be formalised into an enterprise agreement, which as noted by Naughton and Pittard, is the "principal focus" of the Act.Naughton, Richard; Pittard, Marilyn (2015). Australian Labour and Employment Law. LexisNexis. pp 596.
Part 2-4: Enterprise Agreements On 1 July 2010, the new bargaining arrangements under the Act became operational.Cooper, R. (2009). The 'New' Industrial Relations and International Economic Crisis: Australia in 2009. Journal of Industrial Relations. Vol. 52, No. 3. pp. 261–74. Contrary to the individual arrangements dominant under WorkChoices, the Act emphasises enterprise based bargaining, removing individual Australian Workplace Agreements. The Act continues to outlaw pattern bargaining and removed the distinction between union and non-union agreements.
Under the Act there are three types of enterprise agreement.Fair Work Act 2009 (Cth) s 172. First, a single-enterprise agreement made between an employer and the employees whom the agreement will cover.Fair Work Act 2009 (Cth) s 172(2). Second, a multi-enterprise agreement made between two or more employers, covering the employees of those employers.Fair Work Act 2009 (Cth) s 172(3). Third is a 'greenfields' agreement between an employer and trade union, made in relation to a new business which has not commenced operations.Fair Work Act 2009 (Cth) s 172(4).
Better Off Overall Test
The most common type of enterprise agreement is the single-enterprise, and the principal requirement for such an agreement to be approved by the Fair Work Commission is that it passes what is known as the "Better Off Overall Test" (BOOT). The BOOT involves the Fair Work Commission assessing a proposed agreement and ensuring it provides conditions more favourable than current legal minimum entitlements.
The BOOT is different to its predecessor, the 'no disadvantage test' which allowed passing of a collective agreement provided it would not result in conditions less favourable to those otherwise applicable. Naughton and Pittard note the different language and requirements of the BOOT, suggesting it 'can be interpreted quite differently from the [no disadvantage test]' raising the bar higher to ensure workers are actually better off, rather than simply not disadvantaged.
There has been mostly partisan debate about aspects of the BOOT in its current form. The Industrial Relations Minister Christian Porter in 2020 introduced legislation designed to weaken the BOOT, but withdrew it in March 2021 in the face of opposition from independent crossbenchers. The legislation would have allowed the Fair Work Commission significant discretion to approve an agreement that places workers on conditions less favourable than they otherwise would be entitled. Trade unions and the Australian Labor Party argued such changes would result in cuts to workers pay and opposed the changes.
Good faith bargaining A core objective of the Act is to enable the facilitation of good faith bargaining.Fair Work Act 2009 (Cth) s 171(b). This involves each party making a sincere effort in negotiations,Cooper, R. & Ellem, B. (2009) 'Fair Work and the Re-regulation of Collective Bargaining', Australian Journal of Labour Law, vol. 22, No. 3, pp. 284–305. including attending and participating in meetings at reasonable times, disclosing relevant information and considering proposals genuinely and in a timely manner.Fair Work Act 2009 (Cth) s 228. Capricious or unfair conduct undermining collective bargaining is prohibited. Parties may seek bargaining orders from the Fair Work Commission if they believe the other party has failed to comply with these good-faith bargaining obligations. Good-faith bargaining does not require a bargaining representative to make concessions during bargaining for the agreement, nor does it require a bargaining representative to reach agreement on the terms that are to be included in the agreement.
If one or more of the bargaining parties does not meet the good-faith requirements, the concerned party should first provide the party allegedly not bargaining in good faith with a written notice setting out those concerns to the relevant bargaining representatives, and a reasonable time within which to respond to those concerns.Fair Work Act 2009 (Cth) s 229. However, Section 229 of the Act states it may not be necessary to comply with the notice requirements should the Fair Work Commission be 'satisfied that it is appropriate in all the circumstances to do so'.If the party does not respond appropriately to the written notice, the Fair Work Commission can make a bargaining order.Fair Work Act 2009 (Cth) s 230. Should the relevant party continue to ignore the good-faith requirements following this order, the Fair Work Commission can issue a serious breach declaration.Fair Work Act 2009 (Cth) s 235. If the bargaining representatives have not settled the issue of non-compliance by the end of the post-declaration negotiating period (generally 21 days), the Fair Work Commission can issue a bargaining related workplace determination. s 29.
Bargaining agents The Act stipulates that employers must take all reasonable steps to notify employees of their right to a bargaining agent not later than 14 days after the notification time of the agreement. The notification time is the time when the employer agrees to bargain or initiates bargaining when the FWC determines that there is majority support among employees for collective bargaining, or when a scope order (an FWC-issued order to resolve questions about the employees covered by an agreement) comes into operation. The notice must specify that the employee may appoint a bargaining representative to represent the employee in bargaining for the agreement and a matter before FWC that relates to bargaining for the agreement. An employee organisation cannot be a bargaining representative of an employee unless the organisation is entitled to represent the industrial interests of the employee. A person may revoke their bargaining agent in writing. Bargaining agents are described in Division 3 of the Fair Work Act 2009, and can be the employer, a person the employer appoints in writing, the employee, or a person an employee appoints in writing., Division 3: Bargaining and Representation During Bargaining.
If the employee is a member of an employee organisation that is entitled to represent the industrial interests of the employee and the employee does not appoint another person as their bargaining representative, the organisation will be the bargaining representative of the employee. Instruments for appointing a bargaining representative are also set out in Division 3. An appointment of a bargaining representative comes into force on the day specified in the instrument of appointment. The employer must be given the instrument of appointment of the bargaining agent. For an appointment made by an employer, a copy of the bargaining instrument must be given, on request, to a bargaining representative of an employee who will be covered by the agreement.
Mandatory terms Mandatory terms in an enterprise agreement are set out in Division 5 of the Act. Agreements must include a flexibility term, that is, a mechanism for allowing variations in the agreement to meet needs of individual employees while still preserving basic entitlements and protections. They must include the obligation for the employer to consult with covered employees about major workplace changes that are likely to have a significant effect on the employees and allow for the representation of those employees for that consultation. The agreed-on base rate of pay cannot be below that set by the relevant modern award.
Key provisions
Part 2-2: National Employment Standards There are eleven minimum conditions covered under the National Employment Standards:
A limit on maximum weekly hours, ensuring employers can not request or require an employee to work more than 38 hours for full-time employees or the ordinary hours of work for a part-time employee.Fair Work Act 2009 (Cth) s 62