Proposed changes to agreements in new IR Bill

Posted by on Jan 12, 2021

On 9 December 2020, Attorney-General and Industrial Relations Minister Christian Porter introduced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (IR Bill) to the Australian Parliament.

The IR Bill was drafted following the formation of five IR reform working groups which were made up of employer and industry groups and unions. The working groups discussed five key areas of reform to Australia’s industrial relations system in a post COVID-19 environment. The five areas are:

  1. Award simplification;
  2. Greenfields agreements;
  3. Casual employment;
  4. Enterprise agreements; and
  5. Compliance and enforcement.

Starting with the proposed reforms to enterprise agreements and Greenfields agreements, Justitia will provide a summary of the proposed reforms contained in the IR Bill. The IR Bill is presently before a committee due to report in March 2021 and it will be debated by Parliament sometime after that. While we do not expect the Bill to pass in its current form, employers should be aware of how workplaces may be impacted in the near future through changes to workplace laws.

Enterprise Agreements

The proposed changes to enterprise agreements are to aid economic recovery by having such instruments assessed and approved faster than in the current environment. The proposed changes include:

  • The introduction of a model term that explains the interaction between the National Employment Standards (NES) and enterprise agreements, rather than the Fair Work Commission (FWC) having to be satisfied that the enterprise agreement terms do not exclude the NES.
  • An increase from 14 days to 28 days, to the period of time employers have to issue the Notice of Employee Representation Rights to employees.
  • A simplification of pre-approval process requirements through the introduction of a less prescriptive approach. This includes introducing, as the key requirement in the pre-approval process, a more general obligation on employers to take reasonable steps to ensure employees are given a “fair and reasonable opportunity” to decide whether or not to approve the proposed agreement.
  • Clarification of the voting requirements with respect to which employees will be asked to vote. They are: full-time and part-time employees employed at the time the request to vote is made, and casual employees who perform work for the employer at any time during the access period (the period in which employees have access to information to help them decide whether to vote for the agreement).
  • Changing the Better Off Overall Test (BOOT) so that the FWC can approve agreements after taking into account matters including:
    • non-monetary benefits provided by the agreement; and
    • patterns of work in a workplace such as rostering and shift patterns, kinds of work including the level of skill or responsibility involved in the work and conditions under which work is done, and types of employment being part time, full time, casual and shift work. The patterns and kinds of work, and the types of employment, that the FWC may have regard to must be current or reasonably foreseeable; the FWC will not be required to take into account “hypothetical” circumstances. For example, where the employer is unlikely to engage casual workers or require weekend work over the life of the agreement then the FWC cannot have regard to these circumstances in applying the BOOT.
  • Imposing a time limit for enterprise agreement approvals. The FWC will be required to decide whether it approves an agreement or not within 21 working days of the agreement being filed for approval. If the FWC is unable to meet this time frame it must give notice to the employer and union and publish this notice on their website (or other form as the FWC considers appropriate).

Greenfields Agreements

Another proposed change is for certain Greenfields enterprise agreements to have longer terms.  Greenfields agreements covering major projects of at least $500 million in value, will be permitted to have a nominal expiry date of eight years after the agreement is approved. This extension to the usual four years may be possible for projects worth at least $250 million but less than $500 million where the Minister makes a declaration that such a project is a major project. The Minister must take into account certain circumstances including the national significance of the relevant project.

For a Greenfields agreement to have a nominal expiry date of more than four years after the agreement is approved, it must contain a term that provides for at least an annual increase to the employees’ base rates of pay.