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18 June 2009 6:37am

With less than a fortnight to go before the national workplace relations changes begin to take effect, all recruiters must ensure they’re aware of their responsibilities and obligations. Here, Deacons partner Stuart Kollmorgen highlights the key issues.

Unfair dismissals
Under the Fair Work Act, parts of which take effect on 1 July, a larger number of employees – including on-hired workers – will be eligible to bring unfair dismissal claims against their employer.

Currently, only “large employers” (employing 100 workers or more) face these claims, but the threshold is being reduced to 15 employees. The minimum employment period before bringing a claim is six months for large employers (15+ workers) and 12 months for small ones.

When making employees redundant under the new laws, an area Kollmorgen says is “obviously critical at the moment”, there are a couple of extra tests that employers will need to satisfy in order for a dismissal to be fair.

The employer has to consider redeployment options within the company and associated entities, he says, which could include host companies.

An employer also has to comply with all consultation obligations under awards or collective agreements with employees affected by redundancies. “If they haven’t done those two things [the dismissal] could be unfair.”

Recruiters should also be aware that there will be a new decision maker – Fair Work Australia – determining these claims, Kollmorgen says.

“It’s going to be less formal, but we don’t really know yet what differences there will be in the way Fair Work Australia conducts mediation and final hearing phases.”

View the federal government’s fact sheet on unfair dismissals for small employers here.

Right of entry
There are some minor changes to unions’ right of entry to workplaces which will affect recruitment and labour hire companies, Kollmorgen says.

“It used to be the case that if you had a collective agreement applying to a workplace which had a union party to it, then that made it clear which union could enter to meet with potential new members and investigate breaches.

“That’s changed. Now if you’re a union whose eligibility rules cover an employee, you can enter the workplace to meet with employees whether or not you’re bound by a collective agreement there. So another union could come in and meet with your employees.”

Why it’s important: The changes give unions increased ability to organise within the on-hire industry, Kollmorgen says, with implications for bargaining (see below).

Check out the right of entry fact sheet here.

Good faith bargaining
The good faith bargaining elements of the new laws pose significant issues for the recruitment industry, Kollmorgen says.

“An employer can no longer say, ‘I’m not interested in bargaining’. If it’s approached by a bargaining representative for an employee – in reality a union – and the union is able to show there is majority support within that group of employees for a collective agreement, then the employer… has to bargain in good faith.

“What that seems to mean is that there is a presumption that an agreement will be reached and that the employer has to approach negotiations in good faith, provide information, and meet at reasonable times, etc.”

Why it’s important: A labour hire company might be quite large with employees “all over the place in different pockets”, Kollmorgen points out. The test for “majority support” could be met if most workers at a worksite, or across a couple of regions, or right across a whole workforce indicate they want a collective agreement.

“If there is majority support within a group, whatever it is, those employees could force the employer to the table to negotiate.”

Labour hire providers are most likely to be affected when their employees are working alongside directly employed workers who are covered by an agreement with attractive conditions, he says.

They can protect themselves against bargaining requests by “making sure that their employees are happy with the terms and conditions that they’re on and the sort of flexibility that labour hire employment gives them.

“If that’s the case, there doesn’t appear to me to be a reason why they’d want to change their terms and conditions just because a union comes along and says ‘join up and we’ll represent you’,” Kollmorgen says.

View the good faith bargaining fact sheet here.

Modern awards
Currently, the recruitment industry is providing workers to lots of industries with minimal award coverage, but under the new system, modern awards will apply as a common rule to all employees in a particular industry or occupation.

Therefore, Kollmorgen says, “I believe there’ll be very few non-managerial employees who will not be covered.”

The terms and conditions of modern awards are quite similar to the awards that commonly apply under state systems (or in Victoria under the federal system), “so in many cases there won’t be a great deal of surprise in terms and conditions, but the fact there is award coverage is the impact there”.

Modern awards come into force from 1 January, and some have already been developed (including those for clerical, retail, cleaning, graphic artists, IT, restaurants and construction).

What to do: Labour hire providers should check the relevant modern awards for the industry they provide staff to and ensure they understand the new terms and conditions that they’re going to have to meet, Kollmorgen says, and identify any potential problems.

If labour suppliers want more flexibility than is provided in the awards, they have the option of making an enterprise agreement, which will over-ride the award but must pass a “better off overall” test (the BOOT).

An agreement might, for instance, change an entitlement such as a penalty rate or an overtime rate, in exchange for a higher base rate of pay.

Read about the BOOT here.

Transfer of business
The transfer of business provisions in the new Act, which come into effect in July, make it more likely that labour hire employers that transition on-hire employees will be bound by the agreements of the temps’ previous employer, Kollmorgen says.

The test for whether a business has transferred will, under the FWA, be satisfied in a greater number of cases where employees move from one employer to another, he says.

It will apply to host employers in temp-to-perm cases as well as labour hire employers that transition on-hire workers after a supply contract changes hands.

If the employees becoming permanent or being transitioned are covered by a collective agreement, “that agreement will go across with them and bind the employer for an indefinite period of time – not just the 12 months under Work Choices but indefinitely”.

The test for whether an agreement goes across with the employees is firstly whether the work being conducted by the employees is “substantially the same”.

“It used to be the case that it needed to be the character of the business that was substantially the same, and on-hire was different to, say, construction or manufacturing, whereas now it’s the work. So if an employee is doing construction or manufacturing work for the on-hire employer and then the same work for the direct employer, that test would be satisfied.”

The second part of the test is whether there has been a transfer of some assets, “which could easily be satisfied in a typical transfer of business”, Kollmorgen says.

This could create problems for the on-hire industry because “you can have two groups of employees working alongside each other, doing the same work, but being paid differently”.

What to do about it: A labour hire employer’s solution to the problem is to do a new collective agreement covering “everyone”, Kollmorgen says.

“They could effectively be forced into that, so if you’re going to take on employees, and transfer them across to you, then you need to be aware that you may in the future need to do a collective agreement in order to regularise all the terms and conditions.”

Employers are “grappling” with that now, he says, “because a 12-month transition period [under the Work Choices regime] was manageable, but if you’ve got to have two payroll systems indefinitely, and maybe not just two, that is a major problem in an organisation”.

Read more about agreements here.(

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