Amendments to the Fair Work Act - Part 1

Posted by Luke Mitchell on 17 February 2015

During the 2013 election campaign, the coalition indicated that they would be seeking to make a number of changes to the Fair Work Act if elected.  The government’s first round of changes have now been passed by the House of Representatives and are currently before the Senate.  If passed there are a number of procedural and technical changes that are being proposed to the Act, many of which will not affect everyday businesses, however some of the more significant changes, if passed, include:

Winding back Unions’ right of entry

In 2013 the Fair Work Act significantly expanded Unions’ right of entry into a workplace.  The often bemoaned changes allow a Union official to enter a workplace to hold discussions with employees if it was entitled to represent the industrial interests of relevant employees at that workplace. This was an extremely broad right of entry and saw a significant increase in the number of Union visits to workplaces causing frustration for many employers.  If the amendment to the Act is passed, those provisions will be repealed and a Union will only have a right of entry where the Union is bound by an industrial instrument that covers the workplace where they have a members or they have been expressly invited to attend the worksite by a member or a prospective member. 

Payment of annual leave loading on termination of employment 

There has long been confusion under the Fair Work Act whether or not annual leave loading is part of the payment due for unused annual leave paid out on termination of employment.  Ordinarily annual leave loading amounts to 17.5% of the base amount paid to their employee for the annual leave.  Prior to the Fair Work Act the position was that leave loading was only paid out on termination if the relevant industrial instrument provided for it.  However, since the introduction of the Fair Work Act there has been confusion about whether or not the provisions of the Act entitle an employee to the payment of their unpaid leave loading on termination of employment.  If the resolution is passed, the Act will be clarified such that annual leave loading will only be paid out on termination where it is expressly provided for under a modern award or it has been specified in the contract of employment.  Currently, only 45 of the 122 existing modern awards expressly deal with leave loading on termination of employment. 

Accruing leave whilst on Worker’s Compensation 

The amendment seeks to settle an area which has caused employers significant confusion and uncertainty over recent times.  The Fair Work Act currently indicates that if an employee is absent due to personal injury or illness for which they are receiving Worker’s Compensation, then they are not entitled to take or accrue annual leave or any other type of leave.  However the preceding section of the Act indicates that this does not impact on the employee’s entitlement to accrue leave under State legislation while receiving Worker’s Compensation.  Thus, if the State Worker’s Compensation legislation allows for the accrual of annual leave whilst receiving Worker’s Compensation, then the Fair Work Act does not prevent this.  

In New South Wales, section 49 of the Worker’s Compensation Act has caused significant confusion as to accrual of annual leave whilst an employee is receiving compensation. It has even been the subject of a recent Federal Circuit Court decision. The Bill proposes to repeal the section of the Fair Work Act which causes the uncertainty such that all employees across Australia will have the same entitlements with respect to taking and accruing annual leave whilst absent from leave and receiving Worker’s Compensation.  That is, they will not be entitled to take or accrue annual leave or any other type of leave whilst absent due to injury or illness and receiving Worker’s Compensation.  

Conclusion 

Many of the changes which are proposed under the Bill seek to clarify areas of uncertainty and practical difficulty which have arisen under the Fair Work Act since it’s inception in 2009.  However the changes appear to continue the moderate line that the coalition have taken in relation to industrial relations law matters.  No doubt many employers were hoping for more substantive changes to the Act to reduce the impact of the current regulatory framework on their businesses.   

If you require any advice or assistance with your employment law needs, contact the specialist team from Dooley & Associates.

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