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2004
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
WORKPLACE RELATIONS AMENDMENT
(SMALL BUSINESS EMPLOYMENT PROTECTION) BILL
2004
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment and
Workplace Relations, the Honourable Kevin Andrews MP)
OUTLINE
The Bill would amend the Workplace Relations Act
1996 (WR Act) to protect small business employers from redundancy payments
that would otherwise adversely impact on the capacity of small businesses to
provide employment.
On 26 March 2004, the Australian Industrial
Relations Commission (the Commission) handed down a test case decision
(PR032004) which determined that the exemption of businesses with fewer than 15
employees from redundancy pay obligations should be removed. The Commission
decided that the redundancy pay scale determined in 1984 for larger businesses
should now apply to small businesses. The scale ranges from four weeks’
pay after one year of service to eight weeks’ pay after four years of
service. On 8 June 2004, the Commission handed down a supplementary decision
(PR062004), in which it decided that the redundancy pay scale to small business
should not take into account service rendered prior to the operative date of the
March decision. Prior service will be taken into account in the case of
employees of employers of 15 or more employees.
The Australian Government
opposes any attempt to apply redundancy pay obligations on employers who employ
fewer than 15 employees. To achieve this, the Bill would:
• amend
paragraph 89A(2)(m) of the WR Act to limit the allowability of redundancy pay to
employers of 15 or more employees;
• provide that any variations to
awards, made after the 26 March 2004 redundancy test case decision and imposing
redundancy pay obligations on employers who employ fewer than 15 employees, have
no effect;
• prevent the Commission from making redundancy pay orders
under section 170FA of the WR Act against an employer of fewer than 15
employees;
• exclude constitutional corporations which employ fewer
than 15 employees from redundancy pay obligations which may be imposed by State
laws, State awards or State authority orders. However, the Bill will not remove
redundancy pay obligations that were imposed by a State law, State award or a
State authority order before 26 March 2004; and
• override Territory
laws to the extent that they would have the effect of imposing redundancy pay
obligations on all employers in a Territory that employ fewer than 15
employees.
FINANCIAL IMPACT STATEMENT
The measures in this
Bill are budget neutral.
NOTES ON CLAUSES
Clause 1 – Short
title
This is a formal provision specifying the short title of the
Act.
Clause 2 – Commencement
This clause specifies
that the Act would come into operation on the day on which it receives the Royal
Assent.
Clause 3 – Schedule(s)
Clause 3
provides that an Act specified in a Schedule to this Act is amended or repealed
as set out in the Schedule, and that any other item in a Schedule operates
according to its terms.
Workplace Relations Act 1996
Item 1 –
Paragraph 89A(2)(m)
1.1 This item would amend the WR Act to replace
existing paragraph 89A(2)(m).
1.2 Proposed paragraph 89A(2)(m) would make
redundancy pay by an employer of 15 or more employees an allowable award
matter.
1.3 This means that redundancy pay by an employer of fewer than
15 employees would not be an allowable award matter.
Item 2 –
Subsection 89A(7)
1.4 This item would amend the WR Act to omit
“Subsection (1)” from subsection 89A(7) and substitute it with
“Subject to subsection (7A), subsection (1)”.
1.5 This
amendment is consequential to item 3 which would insert proposed subsection
89A(7A).
Item 3 – After subsection 89A(7)
1.6 This
item would insert proposed subsection 89A(7A) to the WR Act.
1.7 Proposed
subsection 89A(7A) would have the effect that the Commission would not be able
to make an exceptional matters order about redundancy pay by an employer of
fewer than 15 employees.
Item 4 – After subsection
89A(8)
1.8 This item would insert proposed subsection 89A(8A) to the
WR Act.
1.9 Proposed subsection 89A(8A) is an interpretative provision
for proposed paragraph 89A(2)(m) and proposed subsection
89A(7A).
1.10 Proposed paragraph 89A(8A)(a) sets out the time – the
relevant time – at which it is to be worked out whether a particular
employer employs 15 or more employees or fewer than 15 employees for the
purposes of paragraph 89A(2)(m) and subsection 89A(7A).
1.11 That time is
either when notice of redundancy is given by the employer or by the employee who
becomes redundant, or when the redundancy occurs, whichever happens first. The
reference to notice of redundancy being given by the employee refers to the
situation where an employee elects to take voluntary redundancy and advises the
employer of that fact.
1.12 Proposed paragraph 89A(8A)(b) provides that
a reference to employees in either proposed paragraph 89A(2)(m) or proposed
subsection 89A(7A) includes a reference to the employee who becomes redundant
and any other employee who becomes redundant at the relevant time. A reference
to employees also includes any casual employee who, at the relevant time, has
been engaged by the employer on a regular and systematic basis for at least 12
months, but does not include any other casual employee.
Item 5
– After Part VI
New Part VIAA – State and Territory laws etc. about redundancy payments by small businesses
1.13 This item would amend the WR Act to insert new “Part VIAA
– State and Territory laws etc. about redundancy payments by small
businesses”.
New section 167– Certain small
businesses not bound by requirement to pay redundancy
pay
1.14 Proposed section 167 provides that State laws, State awards,
State authority orders and Territory laws will have no effect to the extent that
they would require a relevant employer that employs fewer than 15 employees to
pay redundancy pay.
1.15 Proposed subsection 167(1) provides that the
section applies to a State law, a State award, a State authority order or a
Territory law, each of which is an ‘eligible
instrument’.
1.16 Proposed subsection 167(2) provides that if an
eligible instrument would have the effect of requiring a relevant employer that
employs fewer than 15 employees to pay redundancy pay, the eligible instrument
does not have that effect.
1.17 Proposed paragraph 167(3)(a) sets out the
time – the relevant time – at which it is to be worked out whether a
relevant employer employs fewer than 15 employees for the purposes of proposed
subsection 167(2).
1.18 That time is either when notice of redundancy is
given by the employer or by the employee who becomes redundant, or when the
redundancy occurs, whichever happens first. The reference to notice of
redundancy being given by the employee refers to the situation where an employee
elects to take voluntary redundancy and advises the employer of that fact.
1.19 Proposed paragraph 167(3)(b) provides that a reference to employees
in proposed subsection 167(2) includes a reference to the employee who becomes
redundant and any other employee who becomes redundant at the relevant time. A
reference to employees also includes any casual employee who, at the relevant
time, has been engaged by the employer on a regular and systematic basis for at
least 12 months, but does not include any other casual
employee.
1.20 Proposed subsection 167(4) defines certain terms used in
the section:
• ‘Relevant employer’ means:
(a) in the
case of a State law, a State award or a State authority order - a constitutional
corporation;
(b) in the case of a Territory law - any
employer.
• ‘State authority order’ means an order
made, or any other thing done, by a State industrial authority. A State
industrial authority is defined in subsection 4(1) of the WR Act
as:
(c) a board or court of conciliation or arbitration, or tribunal,
body or persons, having authority under a State Act to exercise any power of
conciliation or arbitration in relation to industrial disputes within the limits
of the State;
(d) a special board constituted under a State Act relating to
factories; or
(e) any other Stare board, court, tribunal, body or official
prescribed for the purposes of the definition.
• ‘State
law’ means a law of a State including any regulations or other instruments
made under such a law but does not include a State employment
agreement.
• ‘Territory law’ means a law of a Territory
including any regulations or other instruments made under such a
law.
Item 6 – At the end of section 170FA
1.21 This
item would amend section 170FA to include new subsections 170FA(3) and (4).
1.22 Proposed subsection 170FA(3) provides that the Commission must not
make an order to give effect to Article 12 of the Termination of Employment
Convention in relation to the matter of redundancy pay by an employer of fewer
than 15 employees.
1.23 Proposed paragraph 170FA(4)(a) sets out the
time – the relevant time – at which it is to be worked out whether
an employer employs fewer than 15 employees for the purposes of subsection
170FA(3).
1.24 That time is either when notice of redundancy is given by
the employer or by the employee who becomes redundant, or when the redundancy
occurs, whichever happens first. The reference to notice of redundancy being
given by the employee refers to the situation where an employee elects to take
voluntary redundancy and advises the employer of that fact.
1.25 Proposed paragraph 170FA(4)(b) provides that a reference to
employees in proposed subsection 170FA(3) includes a reference to the employee
who becomes redundant and any other employee who becomes redundant at the same
time. A reference to employees also includes any casual employee who, at the
relevant time, has been engaged by the employer on a regular and systematic
basis for at least 12 months, but does not include any other casual
employee.
Item 7 – Application
1.26 This item
provides that the amendments contained in items 1 to 4 of this Schedule would
apply where, after the Schedule commences, the Commission
is:
• dealing with an industrial dispute by arbitration;
and
• making an award or order about the prevention or settlement of an
industrial dispute; and
• varying an award or order that would involve
maintaining the settlement of an industrial dispute.
This item applies
whether the industrial dispute arose before or after the commencement of the
Schedule.
1.27 This item also provides that the amendment made by item 5
applies to:
• an eligible instrument, made after the commencement
of this Schedule, that has the effect of requiring a relevant employer that
employs fewer than 15 employees to pay redundancy pay; and
• an
eligible instrument, made before or after the commencement of this Schedule,
that is amended or varied after the commencement of this Schedule and has the
effect of requiring a relevant employer that employs fewer than 15 employees to
pay redundancy pay.
1.28 In addition, this item provides that the
amendment made by item 6 to section 170FA would apply where the Commission is
making orders after commencement of this Schedule.
Item 8 –
Transitional – awards and orders of the Commission
1.29 This
item provides that if, during the period from 26 March 2004 until this Schedule
commences, the Commission made an award or order that had the effect of
requiring an employer of fewer than 15 employees to pay redundancy pay, or the
Commission varied an award or order that was made before or during that period
to that effect, then from the commencement of this Schedule such an award or
order ceases to have that effect.
1.30 This item sets out the time
– the relevant time – at which it is to be worked out whether an
employer employs fewer than 15 employees for the purpose of the transitional
provisions.
1.31 That time is either when notice of redundancy is given
by the employer or by the employee who becomes redundant, or when the redundancy
occurs, whichever happens first. The reference to notice of redundancy being
given by the employee refers to the situation where an employee elects to take
voluntary redundancy and advises the employer of that fact.
1.32 This
item also provides that a reference to employees in the transitional provision
includes a reference to the employee who becomes redundant and any other
employee who becomes redundant at the relevant time. A reference to employees
also includes any casual employee who, at the relevant time, has been engaged by
the employer on a regular and systematic basis for at least 12 months, but does
not include any other casual employee.
Item 9 – Transitional
– Eligible instruments
1.33 This item deals with the operation
of an eligible instrument within the meaning of subsection 167(1) that is made,
amended or varied during the period from the start of 26 March 2004 until this
Schedule commences and which has the effect of requiring a relevant employer
that employs fewer than 15 employees to pay redundancy pay. This item provides
that such an eligible instrument ceases to have effect from the commencement of
this Schedule.
Item 10 – Protection of existing
entitlements
1.34 This item ensures that nothing in this Schedule or
an amendment made by this Schedule would affect any entitlement to a redundancy
payment that had arisen before the commencement of this Schedule.