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Employment Law - The New Fair Work Act - Contracting With Employees (3)

Date: August 14, 2009

Authors: Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.

Welcome to our 5 Part series on The New Fair Work Act. We hope you find the series interesting and informative. You can find the rest of the series at the links below

 

 

Essentially, with the introduction of the Fair Work Act, there are two ways in which an employer can contract with the employees in its workforce. The first is by way of common law contracts of employment. This is the subject of a separate LAC Lawyers’ article available through the website. The other way is by way of collective bargaining. Whilst the Fair Work Act makes it much easier for employees to call upon union assistance in the process of collective bargaining, there is no requirement for union involvement. It is not compulsory. An employer can collectively bargain with its workforce and arrive at an outcome supported by its non-unionised workforce provided the Fair Work Authority (established by the new legislation) approves the collective agreement. 

AWAs were made unlawful after 27 March 2008. AWAs with terms of up to five years made an lodged before March 2008 will continue to operate. Those AWAs could continue indefinitely in circumstances where they were not replaced or terminated after its normal expiry date – i.e. on or before March 2013. Parties to the AWAs would, however, not be able to re-negotiate the terms of employment with a new or varied AWA. The ITEAs have a nominal expiry date of not later than 31 December 2009. 

Under the Fair Work Act, the vast majority of work agreements will come into existence by way of collective agreements. These will be made between employers and employees. Unions can be named as a party to the agreement. If a union is a named party to an agreement, then that organisation has rights and obligations under the agreement. The union can enforce the agreement in its own name without an effective member.

There are four types of collective agreements. The first is single business collective agreements. 

a) Single Business Collective Agreements

These will form the most common type of collective agreement whereby employees who fall within the scope of the agreement are covered by it and must be made only for a single business or part of a business. A ‘single business’ is defined to mean a ‘business, project or undertaking’ carried on by an employer.

For example, where two or more unrelated employers carry on a ‘joint venture’ they are to be treated as having a single business. It is also possible for two or more corporations that re ‘related’ within the meaning of the Corporations Act 2001 to be treated as a single business however it is not mandatory. Such corporations have the choice as to whether to make separate agreements or join together and make a single agreement.

Moreover, such agreements can include geographically distinct part of the ‘single business’ or ‘a distinct operational or organisational unit within the single business’. Thus it is possible for an employer to have different agreements at different locations or indeed for different divisions at the same locations.

Such agreements face potential oversight by Fair Work Australia for the majority of orders. Protected action is available during the bargaining process by the parties to it. Noticeably, the Fair Work Act does not alter the concept of “protected action” vis a vis “unprotected action”, three days notice of industrial action to be given by a party, and an application for a secret strike ballot to approve industrial action.

This can be formed as part of a union collective agreement as long as the relevant union (s) has one or more members at the company. It is open to an employer as to whom to choose to bargain with.

Conversely, an employee collective agreement can be made and be drawn up by employers and employees and as with union collective agreements must also be approved by a majority of employees to be registered.

Nevertheless, such an agreement must be approved by a ‘valid majority’ of all the workers who are covered by it.

b) Single Interest Employer Registered Collective Agreements

Collective agreements are also available for employers who have franchisees involved and or integrated into their service. Protected action is also available in these types of agreements.

For instance, employers under the direction of a single entity like a franchisor can be covered by a single agreement.

c) Low Paid Multi-Business Collective Agreements

This is an agreement that covers one or more single businesses.

Employees who fall within the scope of the agreement are covered by it, they facilitate multi-employer bargaining including an order from the independent umpire that a relevant third party such as a contractor can be brought to the bargaining table and workplace determination in the event of a stalemate can occur where the parties consent.

Note, there is no legislative provision for protected action to be taken by employees in such instances.

d) Greenfields Collective Agreements

This is an agreement where it can be made where an employer is in the process of setting up a new business.

It may cover any category of employee provided that no employee has been engaged before the agreement is made. The advantage in doing such an agreement is that it will set the terms and conditions of employment which will cover employees who are subsequently hired.

There are two types of greenfieldsagreements. First, a union agreement can be made with one or more unions who are entitled to represent the industrial interest of the workers likely to be covered by the agreement. Secondly, an employer greenfieldsagreement is essentially an agreement made by one part, that being the employer!­

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