Employers must also continue to provide employees with access to their employment records.

The Modern Awards

Many small and medium businesses would not previously have been covered directly by a Federal Award, but will now be covered by the relevant Modern Award in their industry. In some cases, Modern Awards will impose conditions significantly different than the previous State Award, or Notional Agreement Preserving State Award (NAPSA) that applied under the Workchoices system, and employers need to make sure that they make any changes to their workplace practices that may be necessary to comply with the terms of any applicable Modern Award.

Some sectors that may have been previously largely Award free, such as private training enterprises and colleges, are now covered by Modern Awards, and this has in some cases required significant changes to work practices.

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Unfair Dismissal

Under the previous Workchoices system, many small and medium enterprises were exempt from employee claims for unfair dismissal, as claims could not be made against an employer with 100 or fewer employees. This exemption has been removed.

Under the new system, an employee cannot make a claim for unfair dismissal in the first 12 months of employment against an employer with less than 15 employees at the time of dismissal. Where the employer has 15 or more employees, an employee cannot make a claim in the first six months.

The method for determining the number of employees that an employer has for this purpose is quite complicated. The total number of number of ordinary weekly hours worked in the business (averaged over the four weeks prior to the dismissal) is divided by 38 to determine “equivalent full time positions”. Associated entities are treated as a single employer for the purpose of making the calculation. Employers should seek legal advice if they are uncertain about whether they fall below the 15 employee limit.

Businesses that employ employees in less than 15 “equivalent full time positions”, can also prevent unfair dismissal claims by complying with the practices set out in the Small Business Fair Dismissal Code, a document available from the new Federal Workplace agency, Fair Work Australia. If an employer complies with the Code when dismissing an employee, the dismissal will not be found unfair and the employee will be unsuccessful in any claim for unfair dismissal. The Code comes with a checklist and it is recommended that employers complete the checklist to note that they have completed each step to comply with the Code, and keep the checklist as a record. Whilst this will not guarantee that the employer will not be liable for unfair dismissal, in the event of a claim, it is likely to be of assistance to demonstrate that the employer has complied with the Code.

Previously, it was impossible for an employee on a fixed term, fixed task or seasonal contract to claim for unfair dismissal. This is no longer the case, however if such employees are not rehired at the end of their engagement they will not have been “dismissed” and cannot make a claim, irrespective of the circumstances.

Previously, it was not possible for an employee to make a claim for unfair dismissal if the dismissal was for “genuine operational reasons”. This is no longer the case, however if the dismissal was a case of “genuine redundancy” then an unfair dismissal claim cannot be made. To establish that a “genuine redundancy” occurred, the employer must show that it has complied with any consultation requirements in any applicable award or enterprise agreement prior to dismissal for redundancy and that there was no reasonable opportunity for the employee to be redeployed within the employer’s business or that of any associated entity. Whilst the scope of this exception is narrower than under the previous system, it seems that an employee still cannot make an unfair dismissal claim on the basis that they were unfairly selected for redundancy.

Employees claiming unfair dismissal must file an application with Fair Work Australia within 14 days of dismissal, a shorter period than the 21 days previously permitted, although an extension of time may be granted in certain circumstances by Fair Work Australia.

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Enterprise Agreements

An Enterprise Agreement is the name given to the document setting out the terms and conditions of employment at a particular workplace which has been negotiated between employers, employees and their bargaining representatives via the collective bargaining process.

The Fair Work Act has changed many of the rules relating to Enterprise Agreement making and compliance with the new rules is essential. Employers should note the following:

  • Existing Enterprise Agreements will remain valid until their expiry. However, where the National Employment Standards are more generous than the conditions set out in an existing Enterprise Agreement, the National Employment Standards will apply. Employers should check existing Enterprise Agreements carefully to ensure they are complying with the National Employment Standards.
  • It is no longer possible to make registered agreements with individual employees.
  • Under the new system employees and employers are entitled to be represented by a ‘bargaining representative’ during the negotiation of a new Enterprise Agreement. The representative may be any eligible person appointed in writing. Employers are required to negotiate with employees’ bargaining representatives in ‘good faith’ and must inform employees of their right to appoint a bargaining representative.
  • All new Enterprise Agreements must be approved by Fair Work Australia before they can commence operation and there are now different rules about terms that Enterprise Agreements must and must not include.

It is recommended that employers in small to medium businesses seek legal advice before seeking to implement a new Enterprise Agreement for their business.

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The new system has introduced for the first time a general legislative entitlement to redundancy pay for employees of national system employers with 15 or more employees (on a head count basis, not the “equivalent full time positions” used for unfair dismissal). Casual employees and employees on fixed term contracts are not entitled.

Under the transitional provisions in the Fair Work legislation, unless an employee was previously covered by an award or other instrument that provided for redundancy entitlements, the new entitlement does not commence until the employee has completed a qualifying period of service of 12 months, commencing on 1 January 2010.

Employers in medium sized enterprises that were previously award free should bear in mind this new entitlement will commence for current employees still employed in 2011.

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Requests for Flexible Working Arrangements

The Fair Work Act creates a new right for employees with at least 12 months service to request a change in working arrangements to assist them in caring for pre-school aged children or children under 18 with a disability. Employers are permitted to refuse, if they have “reasonable business grounds”. So long as an employer actually provides a written response to an employee’s request, the Fair Work Act provides no grounds for an employee to challenge a refusal. It is important, however, that if an employee makes such a request and the employee does not wish to agree to it, then a written response must be provided. Employers should bear in mind, however, that an employee may be able to make a claim in relation to a refusal by an employer to accommodate such a request under anti-discrimination legislation.

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Record Keeping

Many of the record keeping obligations under Workchoices have been retained and there are some new record keeping obligations. To comply with the Fair Work Act, employers must keep accurate, up-to-date time and wages records for all employees. Employer’s records must include:

  • Basic employment details, such as nature of employment (part-time, casual etc) and the employee’s commencement date
  • Rates of pay
  • Overtime hours worked
  • Averaging arrangements – that is, any arrangement made between employer and the employee to ‘average’ the hours the employee works over a period of time to take into account significant fluctuations from week to week
  • Leave entitlements
  • Superannuation contributions made
  • Termination of employment details (where applicable)
  • Details of any Individual Flexibility Arrangements which have been made and any guarantees of annual earnings
  • The employer’s Australian Business Number

Employers must also continue to provide employees with access to their employment records.

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