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2002
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
WORKPLACE
RELATIONS AMENDMENT
(CHOICE IN AWARD COVERAGE) BILL
2002
EXPLANATORY MEMORANDUM
(Circulated by
authority of the Minister for Employment and Workplace Relations
the
Honourable Tony Abbott MP)
WORKPLACE RELATIONS AMENDMENT
(CHOICE IN AWARD
COVERAGE) BILL 2002
OUTLINE
This Bill proposes amendments to Part VI
(Dispute Prevention and Settlement) and Part IX (Registered Organisations) of
the Workplace Relations Act 1996 to amend provisions concerning the
roping-in of employers to federal awards.
These amendments are directed
towards:
• providing all businesses with more information about
their rights regarding, and the processes involved with, roping-in
claims;
• restraining the ability of unions to rope small
businesses which employ no union members into the federal jurisdiction;
and
• requiring the Commission to inquire into the views of
unrepresented small business employers potentially affected by a roping-in
claim.
FINANCIAL IMPACT STATEMENT
The
proposals contained in the Bill are budget neutral.
REGULATION IMPACT STATEMENT
Constrain Roping-in of Small
Business Employers to Federal Awards
Problem:
Small
businesses can be roped-into federal awards without being fully aware of the
processes involved and the impact that it will have on the business. For
example, there is a current claim by the Shop Distributive & Allied
Employees’ Association (the SDA) to rope in tens of thousands of small
Victorian retail businesses into a federal award. Currently, these businesses
(formerly covered by the Victorian state system before the Victorian Government
referred most of its industrial relations powers to the Commonwealth) are
covered by the legislated minimum conditions in Schedule 1A to the Workplace
Relations Act 1996 (WR Act) which make no provision for a number of minimum
entitlements common in federal awards such as overtime and penalty rates. Thus
a move to a federal award may have significant cost implications for many of the
businesses concerned.
Most of the businesses covered by the roping-in
claim by the SDA are not members of a registered employer organisation. Most
would not have known what to make of the log of claims contained in the letter
sent from the SDA to initiate the roping-in and dispute finding procedures
before the Australian Industrial Relations Commission (the Commission). They
would not, for example, have been aware that such logs are typically ambit in
nature. The majority of small businesses have been unrepresented in the
Commission hearings which have been held and have had no opportunity to
influence the Commission’s eventual decision. While roping-in exercises
on the scale of the SDA claim are unusual, even smaller scale claims are
bewildering to most of the small businesses involved.
Current
Situation:
Roping-in claims occur because federal awards do not
operate on a common rule basis (except in the ACT and Northern Territory), that
is, a business (other than a respondent organisation) must be individually named
as a respondent to an award for the terms and conditions in the award to apply
to the employees and employer in that business. This is due to the limitation
of the conciliation and arbitration power in the Constitution which underpins
the Commission’s powers in the federal jurisdiction. State awards do not
suffer from this limitation and most operate on a common rule basis, that is,
they apply across a sector or occupation within the state.
If a union
wants a federal award to apply to a business it must ‘rope’ the
business into the award. For this to happen the union must make a log of claims
on the business, usually with a high degree of ambit in it (eg. 26 weeks annual
leave) so that the employer could never agree with the claims, and then ask the
Commission to find that a dispute exists between the union and the employer.
This paper ‘dispute’ is commonly resolved by the employer being made
a respondent to the award. Small businesses which do not belong to an employer
organisation often do not respond to the union’s claims, are not
represented before the Commission, and may sometimes not even be aware they have
been roped into a federal
award.
Objectives:
The Government’s
objectives are to:
• provide all businesses with more information about
their rights and the processes involved with roping-in
claims;
• require the Commission to inquire into the views of
unrepresented small business employers affected by a roping-in claim;
and
• constrain the ability of unions to rope small businesses which
employ no union members into the federal
jurisdiction.
Option:
This option contains a number of
measures which are complementary. Where an alleged dispute is notified on the
ground that the employer has not agreed to demands set out in a log of claims,
the Commission would be required not to make any finding of dispute, unless
satisfied that:
• the log of claims, when served, was accompanied by a
notice containing prescribed information;
• the alleged dispute was not
notified until at least 28 days after service of the log;
• the party
notifying the alleged dispute had given the employer at least 28 days notice of
the time and place for hearing of the dispute notification; and
• the
log of claims does not include any demand that requires conduct or provisions
contrary to the freedom of association provisions of the Act, or not pertaining
to the relationship between employers and employees.
The Commission would
be required to inquire as to the views of small business employers affected by
the making of an award, rather than only attending to the views of employers who
appear or are represented at hearings. A dispute with a small business
employer, that is an employer with less than 20 employees, would only be taken
to exist, in a roping-in or log of claims process, where the union has a member
employed by the employer.
Impact analysis (costs and benefits) of the
option:
(a) Effect on employers
The first measure would
ensure that any employer subject to a roping-in claim would be more aware of
what the process involved and would have more time to consider alternative
responses.
The second measure would improve the prospect that small
business would not be inappropriately affected by federal awards, but would
still depend on the Commission’s exercise of its discretion.
The
third measure would effectively prevent the vast majority of small businesses
not currently in the federal jurisdiction from being roped-in to a federal
award. It is broadly estimated that around 6 percent of small businesses have
at least one employee who is a union member. Those small business employers not
currently covered by respondent federal awards and without any employees who are
union members would remain covered by state awards and agreements or in the case
of Victoria by Schedule 1A minima, or in the case of the Territories by common
rule federal awards, or would remain award free.
(b) Effect on
employees
Employees in small businesses which were not roped-in to a
federal award under the above proposals would be covered by state awards or
agreements, or would remain award free or, in Victoria would remain covered by
Schedule 1A in the WR Act, or in the case of the Territories could be covered by
common rule federal awards.
The impact of these proposals would be
different for employees who are or become union members, as roping-in of their
employers would not be precluded.
(c) Effect on consumers and
Australian economy
The third measure would effectively prevent future
large scale roping-in exercises such as the current SDA claim. Where the small
businesses were otherwise award free or in Victoria covered by Schedule 1A
conditions this would prevent potentially significant cost increases being
imposed on small businesses, for example through the imposition of new
conditions such as overtime penalty rates, and the possibility that these costs
would be passed onto consumers. Avoiding these potentially significant cost
increases would also prevent any associated job losses. The potential cost
increases of changing from a state award to a federal award would be less
significant as state awards generally provide for penalty and overtime rates
although these do vary between and amongst state and federal
awards.
Consultation:
The measures contained in this bill
are drawn from the Workplace Relations Legislation Amendment (More Jobs, Better
Pay) Bill 1999 and the Workplace Relations and Other Legislation Amendment
(Small Business and Other Measures) Bill 2001. No specific consultation has
occurred for this most recent proposal. However, there have previously been
formal and informal consultations with small business operators through which
the impact of workplace relations regulation on small business operators has
been broadly identified by employers.
Implementation and
Review:
All of the proposals would require amendments to the WR Act.
DEWR would monitor and
evaluate the effect of such legislative
change.
NOTES ON CLAUSES
Clause 1 - Short
title
1. This is a formal provision specifying the short title
of the Act.
Clause 2 - Commencement
2. This
clause specifies when the various provisions of the Act are proposed to
commence. Sections 1 to 3 and anything in the Act not elsewhere covered by the
table will commence on the day on which the Act receives the Royal Assent. The
amendments set out in Schedule 1 will commence on a single day to be fixed by
proclamation, subject to subsection (3).
3. Clause 2 has the effect that
the item in the table is not proclaimed to commence within six months of the Act
receiving Royal Assent, it will commence on the day following that period of six
months.
Clause 3 – Schedule(s)
4. This clause
provides that an Act that is specified in a Schedule is amended or repealed as
set out in that Schedule, and any other item in a Schedule operates according to
its terms.
SCHEDULE 1 – FEDERAL AWARDS
Item 1 – Subsection 101(1)
1.1 This amendment is
consequential upon the amendment proposed by item 2. It would provide, in
relation to an alleged industrial dispute notified in the Commission, that the
Commission’s powers to determine the parties to the industrial dispute,
the matters in dispute and to record its findings are subject to the
requirements set out in proposed new sections 101A and 101B.
Item 2
– After section 101
New section 101A – When Commission
must not make findings under section 101
1.2 New section 101A would
provide that where an alleged industrial dispute has been notified to the
Commission on the grounds that a party has not agreed to demands set out in a
log of claims, the Commission must not make any findings under section 101
unless it is satisfied that the requirements set out in paragraphs (a) to (d)
were met.
1.3 Proposed new paragraph (a) would require the log of claims
served by the party notifying the alleged industrial dispute be accompanied by a
notice containing prescribed information.
1.4 The purpose of the
requirement contained in paragraph (a) is to ensure that the recipients of logs
of claims, especially recipients that are unfamiliar with the log of claims
process, such as small business or new business operators, are provided with
basic information about the process and their rights and obligations at the time
the log is served.
1.5 Proposed new paragraph (b) would require that
the alleged industrial dispute was notified under section 99 of the Act at least
28 days after the service of the log.
1.6 Proposed new paragraph (c)
would require that the party notifying the alleged industrial dispute had, at
least 28 days before the day fixed for the initial proceedings in relation to
the alleged dispute, served each person alleged to be a party to the dispute
with a notice of the time and place fixed for proceedings.
1.7 The
purpose of the requirements contained in paragraphs (b) and (c) is to ensure
that the recipients of logs of claims and notices of proceedings, especially
recipients that are unfamiliar with the logs of claims process, such as small
business employers, are allowed adequate time to seek advice about their rights
and obligations, and to prepare for any relevant
proceedings.
1.8 Proposed new paragraph (d) would require that the log of
claims does not include any demand that:
• requires conduct that would contravene Part XA of the
Act;
• an objectionable provision (within the meaning of section
298Z, for example, provisions that require or permit or have the effect of
requiring or permitting any conduct that would contravene the freedom of
association provisions) be included in an award or agreement;
or
• does not pertain to the relationship between employers and
employees.
1.9 Proposed new paragraph (d) is designed to ensure that
where a log of claims is served with a view of notifying the Commission of an
alleged industrial dispute in relation to the log, such a log of claims should
only include demands in respect of matters that may be included in an award or
agreement under the Act.
New section 101B – Findings in relation
to employers in small business
1.10 New section 101B would provide
that where an alleged industrial dispute has been notified to the Commission on
the grounds that a party has not agreed to demands set out in the log of claims,
the Commission must not make any findings under section 101 unless it is
satisfied that the requirements set out in subsections (1) to (3) are
met.
1.11 Proposed new subsection 101B(1) states that it applies where an
organisation of employees notifies an alleged industrial dispute on the grounds
that one or more employers (notified employers) have not agreed to demands set
out in a log of claims served by that organisation on those
employers.
1.12 The purpose of the requirement contained in subsection
101B(1) is to make clear that it applies where an organisation of employees
notifies an alleged industrial dispute.
1.13 Proposed new subsection
101B(2) would require that, before making any dispute finding in respect of such
an alleged industrial dispute, the Commission give each notified employer a
notice in writing requesting that the employer inform the Commission within the
time specified in the notice, whether the employer employed less than 20 people
on the service day (defined in subsection 101B(5) as the day the log of claims
was served on the employer).
1.14 The purpose of the requirement
contained in subsection 101B(2) is to give all small business employers an
opportunity to identify themselves to the Commission. The Commission would
accept the employer's statement as prima facie evidence that they are a small
business employer unless evidence to the contrary was provided. The notice is
intended to contain a warning that providing any false or misleading information
to the Commission may result in prosecution under the Criminal Code Act
1995 (Cth). Where evidence that contradicts the employer’s assertion
is provided, the Commission must weigh up whether it accepts that the employer
fits the definition of a small business. The Commission would provide a list of
all employers identifying as small businesses to the relevant organisation(s) of
employees, in order for the organisation to have an opportunity to satisfy the
Commission that the employer was not a small business, or employs a union
member.
1.15 Proposed new subsection 101B(3) prevents the Commission
from determining that a notified employer is party to any dispute finding in
respect of such an alleged industrial dispute unless:
• the Commission is not satisfied that the employer who informed the Commission under subsection 101B(2) was a small business on the service day; or
• the Commission is satisfied that the employer employs a member of the
relevant organisation.
1.16 The purpose of the requirement contained in
subsection 101B(3) is to ensure that a small business employer who identifies
themselves to the Commission and who does not employ a union member is not
determined to be a party to a dispute finding in respect of an alleged
industrial dispute. (New section 290A, proposed by item 3 of this Schedule,
would allow an organisation of employees to apply to the Industrial Registrar to
obtain a certificate that states that a particular small business employer
employs a member of the organisation.)
1.17 Proposed new subsection
101B(4) would require the Commission, before making an award in relation to such
a dispute, to give a notice in writing inviting each party determined to be a
party to that dispute, who the Commission is satisfied employed less than 20
people on the service day, to make comments on the proposed award within the
period specified in the notice.
1.18 The purpose of the requirement
contained in subsection 101B(4) is to ensure the Commission provides an
opportunity for the views of unrepresented small business employers potentially
affected by a roping in claim (ie those businesses employing at least one union
member) to be expressed, by a means other than attending a
hearing.
1.19 Proposed new subsection 101B(5) defines ‘service
day’, in relation to a notified employer, as the day on which the log of
claims was served on the employer.
1.20 Proposed new subsection 101B(6)
makes clear that, for the purposes of working out whether a notified employer
employed less than 20 people on the service day, a casual employee who had been
engaged on a regular and systematic basis for a sequence of periods of
employment of at least 12 months should be counted, but not any other casual
employee.
1.21 New section 290A would provide that an organisation of employees,
for the purposes of section 101B, may apply to the Industrial Registrar for a
certificate certifying that an employee is a member of that organisation. The
certificate will identify the organisation and the employer and is for all
purposes of the Act evidence of what it certifies.
1.22 The purpose of
the section is to provide a mechanism for an organisation of employees to apply
to the Industrial Registrar to prove that a small business employer employs
their members. The certificate will identify the employer and the organisation
of employees but will assure employee confidentiality as it will not identify
employees.
Part 2 – Application provision
Item 4 – Application of items 1, 2 and 3
1.23 This
item proposes that the amendments made by items 1, 2 and 3 of this Schedule,
which would restrict the capacity for small business employers to be roped-in to
Federal awards, apply to alleged industrial disputes notified after the
commencement of this Schedule.