The Fair Work Act, the new Modern Hospitality Industry Award & Your Business

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1 Presented by: Andrew M. Knox Registered Industrial Agent & Advocate phone mob fax knoxad.com.au The Fair Work Act, the new Modern Hospitality Industry Award & Your Business Food for thought in Hospitality 10 December 2009

2 Preliminaries: Chatham House Rules In order to have free discussion what I will say today is subject to legal professional privilege and what anyone may say in this forum is for the benefit of this audience and is not for publication. Background: Armed Services: Duntroon Commissioned Australian Artillery. SA Public Service Board Industrial Arbitration Branch: Industrial Advocacy. CSIRO Staff Officer - South Australia. Myer Stores: Industrial Relations Manager and consultant to the Retail Traders Association and the SA Govt in the formation of contemporary industrial law of the time. Chrysler Australia: Manager, Staff Training and Development. Uniroyal Australia (now Bridgestone Australia) Assistant to the Managing Director. Uniroyal: Director Personnel and Industrial Relations. Marketing Manager Uniroyal Consumer Products. Director, Young & Rubicam Australian Operations and Chrysler/Mitsubishi Australia. Founder 1979, Andrew Knox & Associates, (now Knox Advertising) Marketing, Advertising and Motivation Founder Gorilla Gas: National LP Gas suppliers to hospitality industry. (Sold to Elgas 2005) 2004: Return to Industrial Commission and Industrial Court work as Registered Agent and Counsel. Cognisage Australia Industrial Relations and Management consultancy The service offered extends from mentoring to assisting you form your business strategies, opinions, actions and decisions through to the drafting and formation of your individual and collective agreements and, should the need arise, representing you before the various tribunals and industrial courts as counsel. I like to think I bring the amalgamation of 30 years practical and personal business ownership with 40 years of business management and formal and practical industrial relations. If I act for your business, I must, as a registered agent and advocate, act fearlessly for you with your business interest paramount. I will, however, always advise you how I see your decision impacting on others in your industry in order that you can make informed judgment. I will also advise you what I see as the bigger picture for you business, in particular how a particular decision or stance may impinge upon the motivation of your human resource its effect upon market performance and thus profitability. At the end of the day your it s your business. The decisions you make are yours and provided they are lawful, or are arguably so, those decision will be facilitated and implemented with the greatest efficacy.

3 The Fair Work Act 2009: the environment within which we now work. Not an amended Act.a brand new act 611 pages and 800 sections plus new Regulation, (140 pages) and Rules (161 pages) = 912 pages The previous Workplace Relations Act (including Work Choices) was repealed. Therefore previous legal rulings and precedents may not or will not apply. New legal precedents will take time to evolve through the appeal process and High Court. New Modern Awards face a similar evolution. At the end of the day the arbiter is not FWA rather the Federal Court and State Industrial Courts (as a designate courts under the FWA) whose job it is to apply the law.

4 Awards, Agreements & Flexibility Arrangements. What are your options? Award Enterprise Agreement Award Flexility Clause What are the advantages/disadvantages? Which to choose?

5 Fair Work Act 2009 Subdivision C Terms that must be included in modern awards 144 Flexibility terms Flexibility terms must be included (1) A modern award must include a term (a flexibility term) enabling an employee and his or her employer to agree on an arrangement (an individual flexibility arrangement) varying the effect of the award in relation to the employee and the employer, in order to meet the genuine needs of the employee and employer. Effect of individual flexibility arrangements (2) If an employee and employer agree to an individual flexibility arrangement under a flexibility term in a modern award: (a) the modern award has effect in relation to the employee and the employer as if it were varied by the flexibility arrangement; and (b) the arrangement is taken, for the purposes of this Act, to be a term of the modern award. (3) To avoid doubt, the individual flexibility arrangement does not change the effect the modern award has in relation to the employer and any other employee. Requirements for flexibility terms

6 Fair Work Act 2009 (4) The flexibility term must: (a) identify the terms of the modern award the effect of which may be varied by an individual flexibility arrangement; and (b) require that the employee and the employer genuinely agree to any individual flexibility arrangement; and (c) require the employer to ensure that any individual flexibility arrangement must result in the employee being better off overall than the employee would have been if no individual flexibility arrangement were agreed to; and (d) set out how any flexibility arrangement may be terminated by the employee or the employer; and (e) require the employer to ensure that any individual flexibility arrangement must be in writing and signed: (i) in all cases by the employee and the employer; and (ii) if the employee is under 18 by a parent or guardian of the employee; and (f) require the employer to ensure that a copy of any individual flexibility arrangement must be given to the employee. (5) Except as required by subparagraph (4)(e)(ii), the flexibility term must not require that any individual flexibility arrangement agreed to by an employer and employee under the term must be approved, or consented to, by another person.

7 The Hospitality Industry (General) Award 2010 THE AWARD: What award terms can be varied? 7. Award flexibility 7.1 Notwithstanding any other provision of this award, an employer and an individual employee may agree to vary the application of certain terms of this award to meet the genuine individual needs of the employer and the individual employee. The terms the employer and the individual employee may agree to vary the application of are those concerning: (a) arrangements for when work is performed; (b) overtime rates; (c) penalty rates; (d) allowances; and (e) leave loading. 7.2 The employer and the individual employee must have genuinely made the agreement without coercion or duress. 7.3 The agreement between the employer and the individual employee must: (a) be confined to a variation in the application of one or more of the terms listed in clause 7.1; and (b) not disadvantage the individual employee in relation to the individual employee s terms and conditions of employment. FWA: A modern award must include a term... in order to meet the genuine needs of the employee and employer.

8 The Hospitality Industry (General) Award For the purposes of clause 7.3(b) the agreement will be taken not to disadvantage the individual employee in relation to the individual employee s terms and conditions of employment if: (a) the agreement does not result, on balance, in a reduction in the overall terms and conditions of employment of the individual employee under this award and any applicable agreement made under the Act, as those instruments applied as at the date the agreement commences to operate; and (b) the agreement does not result in a reduction in the terms and conditions of employment of the individual employee under any other relevant laws of the Commonwealth or any relevant laws of a State or Territory. 7.5 The agreement between the employer and the individual employee must also: (a) be in writing, name the parties to the agreement and be signed by the employer and the individual employee and, if the employee is under 18 years of age, the employee s parent or guardian; (b) state each term of this award that the employer and the individual employee have agreed to vary; (c) detail how the application of each term has been varied by agreement between the employer and the individual employee; (d) detail how the agreement does not disadvantage the individual employee in relation to the individual employee s terms and conditions of employment; and (e) state the date the agreement commences to operate.

9 7.6 The employer must give the individual employee a copy of the agreement and keep the agreement as a time and wages record. 7.7 An employer seeking to enter into an agreement must provide a written proposal to the employee. Where the employee s understanding of written English is limited the employer must take measures, including translation into an appropriate language, to ensure that the employee understands the proposal. 7.8 The agreement may be terminated: (a) by the employer or the individual employee giving four weeks notice of termination, in writing, to the other party and the agreement ceasing to operate at the end of the notice period; or (b) at any time, by written agreement between the employer and the individual employee. 7.9 The right to make an agreement pursuant to this clause is in addition to, and is not intended to otherwise affect, any provision for an agreement between an employer and an individual employee contained in any other term of this award.

10 AN AGREEMENT: How is that done and does it help? Part 2 4 Enterprise agreements WHO CAN MAKE ONE & WHAT TYPE? NOTE: 4 YEAR TERM. Single enterprise agreements - self explanatory Multi enterprise agreements - for an existing or genuine new business, activity or project Single interest employers Two or more employers are single interest employers if: (a) the employers are engaged in a joint venture or common enterprise; or (b) the employers are related bodies corporate; or (c) the employers are specified in a single interest employer authorisation that is in operation in relation to the proposed enterprise agreement concerned. s247 Ministerial declaration that employers may bargain together for a proposed enterprise agreement Franchisees The requirements of this subsection are met if FWA is satisfied that the employers carry on similar business activities under the same franchise and are: (a) franchisees of the same franchisor; or (b) related bodies corporate of the same franchisor; or (c) any combination of the above.

11 The Procedure 173 Notice of employee representational rights Employer to notify each employee of representational rights (1) An employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement must take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who: (a) will be covered by the agreement; and (b) is employed at the notification time for the agreement. Content of notice (2) The notice must specify that the employee may appoint a bargaining representative to represent the employee: (a) in bargaining for the agreement; and (b) in a matter before FWA that relates to bargaining for the agreement. Content of notice default bargaining representative (3) If subsection (4) does not apply, the notice must explain that: (a) if the employee is a member of an employee organisation that is entitled to represent the industrial interests of the employee in relation to work that will be performed under the agreement; and (b) the employee does not appoint another person as his or her bargaining representative for the agreement; the organisation will be the bargaining representative of the employee When notice must be given The employer must give the notice as soon as practicable, and not later than 14 days, after the notification time for the agreement.

12 FWA Regulations 2.06 Appointment of bargaining representatives independence and A bargaining representative of an employee must be: (a) free from control by the employee s employer or another bargaining representative; (b) free from improper influence from the employee s employer or another bargaining representative. Schedule 2.1 The Notice: If you are an employee who would be covered by the proposed agreement: You have the right to appoint a bargaining representative to represent you in bargaining for the agreement or in a matter before Fair Work Australia about bargaining for the agreement. You can do this by notifying the person in writing that you appoint that person as your bargaining representative. You can also appoint yourself as a bargaining representative. In either case you must give a copy of the appointment to your employer. SO IT MAY BE YOU ARE BARGAINING WITH ONE UNION REP OR EVERY EMPLOYEE! 181 Employers may request employees to approve a proposed enterprise agreement (1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it. (2) The request must not be made until at least 21 days after the day on which the last

13 VOTING 181 Employers may request employees to approve a proposed enterprise agreement (1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it. (2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given. (3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method. 185 Bargaining representative must apply for FWA approval of an enterprise agreement Application for approval (1) If an enterprise agreement is made, a bargaining representative for the agreement must apply to FWA for approval of the agreement. BUT THEN THE AGREEMENT MUST PASS THE BETTER OFF OVERAL TEST.

14 Passing the better off overall test: When a non greenfields agreement passes the better off overall test (1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if FWA is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee. WHO MAKES THE ASSESSMENT? FWA employees. IS THERE A RIGHT OF APPEAL? NO. SO THE REALITY IS THAT YOU CANNOT, WITH AN ENTERPRISE AGREEMENT, DO BETTER THAN THE AWARD.

15 CONSIDERATION: 1. An Enterprise Agreement, even after going through the ballot process, will not be approved unless it passes the Better Off Overall Test. It will be given the (BOOT). There is no appeal mechanism. Essentially, you may average, aggregate or re-arrange wage rates and hours BUT you will not avoid the new Award in overall calculation. (The Hospitality Industry (General Award) is no better nor worse than the other 122 new modern awards. The AIRC has largely followed a common structure, transitional arrangements being the only significant departures from the structure, award to award.) 2. The question to ask yourself is exactly what do you want to achieve from an Enterprise Agreement that cannot be achieved from an individual flexibility agreement. 3. Parliament s will and intention was to provide for an individual flexibility arrangement, in order to meet the genuine needs of the employee and employer. 4. As a consequence the award provides flexibility of arrangements for when work is performed, overtime rates, penalty rates; allowances, and leave loading (but NOT the base wage rate) and 5. Is not to be approved, or consented to, by another person but, 6. The flexibility arrangement must result in the employee being better off overall than the employee would have been if no individual flexibility arrangement were agreed to. 7. Given no other person must (or may) approve a flexibility agreement and only a court can interfere and then only if it decides the employee is not better off overall in the terms the Parliament intended. THE KEY IS THE EXERCISE OF FREE WILL BY THE EMPLOYEE.

16 The Hospitality Industry (General) Award 2010 Penalty rates 32.1 An employee performing work on the following days will be paid the following percentage of the minimum wage rate in clause 20 for the relevant classification: Mon to Frid Saturday Sunday P/Holiday % % % Full time & P/Time Casual (incl of 25% casual loading) 32.4 Other penalty Employees will be entitled to the following additional penalty for work performed at the following times: (a) Monday Friday 7.00 pm to midnight: 10% of the standard hourly rate per hour or any part of an hour for such time worked within the said hours; (b) Monday Friday midnight to 7.00 am: 15% of the standard hourly rate per hour or any part of an hour for such time worked within the said hours Penalty rates not cumulative... where time worked is required to be paid for at more than the ordinary rate such time will not be subject to more than one penalty, but will be subject to that penalty which is to the employee s greatest advantage.

17 Unfair Dismissal: Part 3 2 Unfair dismissal 382 When a person is protected from unfair dismissal A person is protected from unfair dismissal at a time if, at that time: (a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and (b) one or more of the following apply: (i) a modern award covers the person; (ii) an enterprise agreement applies to the person in relation to the employment; (iii) the sum of the person s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold. 383 Meaning of minimum employment period The minimum employment period is: (a) (i) (ii) (b) if the employer is not a small business employer 6 months ending at the earlier of the following times: the time when the person is given notice of the dismissal; immediately before the dismissal; or if the employer is a small business employer one year ending at that time. 23 Meaning of small business employer (1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

18 Unfair dismissal Small Business Fair Dismissal Code The Small Business Fair Dismissal Code came into operation on 1 July A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements

19 The Code Summary (Immediate) Dismissal It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report. Other Dismissal In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee s conduct or capacity to do the job. The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer s job expectations.

20 Unfair dismissal THINK CAREFULLY BEFORE YOU ACT! THEN ACT CAUTIOUSLY AND PRUDENTLY. OVER ENTHUSIASM TO BE RID OF A BAD EMPLOYEE MAY RESULT IN YOU HAVING TO KEEP THAT BAD EMPLOYEE. ENSURE YOU CAN DEMONSTRATE AN OPEN, FAIR PROCEDURAL TRACK.

21 Be Aware: There is a risk of Other Remedies & Prosecutions other than Unfair Dismissals even if you win. A win in an a Unfair Dismissal matter may not be the end of it. Court action can still be taken as a monetary claim for example for redundancy pay and breach of the award. Penalties up to $33,000 can be levied for breaches. Fair Work Australia is not a court and an action in it does not create issue or other estoppel. Miller v University of New South Wales [2003] FCAFC 180 Even a Demotion can be a Repudiation or breach of Contract. (High Court: Vissher v. Giudice [2009] HCA 34)

22 THE LAST WORD: Cause to pause. Division 5 Other protections 351 Discrimination (1) An employer must not take adverse action against a person who is an employee, or prospective employee, of the employer because of the person s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer s responsibilities, pregnancy, religion, political opinion, national extraction or social origin. 352 Temporary absence illness or injury An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations. Note: This subsection is a civil remedy provision of 60 penalty units for an individual and 300 for a body corporate. A penalty unit is currently $110. ie $6,600 and $33,000 per offence.