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HG Alert: Queensland set to refer its IR powers to the Commonwealth - 2 Nov 2009

Queensland set to refer its IR powers to the Commonwealth

On 27 October 2009, the Queensland Minister for Industrial Relations, Cameron Dick, introduced legislation into Parliament that aims to refer the State’s industrial relations powers for the private sector to the Commonwealth. If passed, Queensland will participate in a single national industrial relations system for all private sector employers and employees, providing greater certainty and uniformity for Queensland businesses.

While timing is uncertain, at this stage it appears that the Government is aiming to pass the legislation in time for the commencement of the National Employment Standards and modern awards in the new federal system, from 1 January 2010.

Background to the Bill

Since the Work Choices reforms began in March 2006, the Commonwealth Government has, for most purposes, regulated the industrial conditions for employees of employers that are “trading or financial corporations”. However, the Commonwealth could not, and presently does not, regulate the industrial conditions for employees of non-corporate employers, or corporate employers who do not engage substantially in trading or financial activity. The result is that local and State governments, businesses operated by sole traders or partnerships, and many charitable organisations, continue to be industrially regulated by State law. Some organisations - ‘transitional employers’ - currently fall somewhere in between, the result of limitations upon the lawmaking power of the Commonwealth, which did not change under the Fair Work Act 2009.

For some employers, determining whether they are a trading or financial corporation, and the applicable source of industrial regulation, continues to be a complicated legal challenge.

The Rudd Government promised to try to change this through co-operative arrangements with States in its Forward with Fairness reform policy, announced before the 2007 federal election.

What does the Bill propose to do?

The Fair Work (Commonwealth Powers) and Other Provisions Bill 2009 proposes to refer the power to make laws in respect of all employers in Queensland from the State Government to the Commonwealth Government, with certain exceptions set out below The Bill provides for the national industrial relations system to apply to all of Queensland’s private sector, and some sections of the Queensland public sector, such as government-owned corporations. Under the Bill, the referral is to be achieved by:

  • extending the application of the text of the Fair Work Act 2009 to the Queensland private sector;
  • for Queensland employers that are not trading or financial corporations, allowing the Commonwealth Government to amend the Fair Work Act 2009 so far as it deals with referred subject matters; and 
  • implementing, in conjunction with the corresponding federal legislation, transitional arrangements for employers and employees moving from the State to the Commonwealth system, including by the following mechanisms:
    -  preservation of State awards and agreements as federal instruments in the same terms as the State instrument, operating on a “no detriment” basis with the National Employment Standards and the federal minimum wage; 
    -  preservation of State awards as federal instruments will continue for a period of 12 months from when the referral begins, after which time the relevant federal modern award will apply; and 
    -  continuing operation of State agreements as federal instruments until they are terminated or replaced by an enterprise agreement made under the Fair Work Act 2009.

Who is excluded from the referral?

According to the second reading speech delivered by the Minister, even after the referral, Queensland’s State industrial relations system will continue to apply to some 300,000 employees in the State public service and local government. People who will not be brought into the federal system include:

  • Ministers and Members of the Queensland Parliament;
  • The Governor and the Office of the Governor;
  • Judges and members of State Tribunals; 
  • State public sector employees and employers;
  • people appointed by the Government under any State legislation;
  • officers and employees of the parliamentary service; 
  • State law enforcement officers; and
  • local government sector employees

Safeguards

The Bill contains safeguards to prevent the Commonwealth Government from making amendments to the Fair Work legislation which impacts on Queensland’s referred jurisdiction without the approval of the Queensland Government.

Other State governments that have referred or are in the process of referring their powers to the Commonwealth include Victoria (in 1996), South Australia and Tasmania. Western Australia is the only government to publicly declare it will not refer its powers. At last report, New South Wales was still considering its position. The Australian Capital Territory and the Northern Territory, as Commonwealth territories, are federally regulated in any event. An inter-governmental agreement, which will be signed by all the referring States and territories, will contain “fundamental workplace relations principles”, which are also set out in the Bill. The agreement will provide that if the government of one or more of the referring States or territories considers that aCommonwealth proposal or amendment to the Fair Work Act 2009 undermines these principles, the proposal will not proceed unless it is endorsed by a two-thirds majority of the referring States, the territories and the Commonwealth. Also, the State government will be able to terminate the reference on three months notice if the Commonwealth Government does or proposes to amend the Fair Work Act legislation in a way that the State considers is inconsistent with these principles.

The Bill also protects certain State entitlements, including beneficial conditions for apprentices and trainees (until Fair Work Australia reviews conditions in this area) and certain award wage rates affecting the community and disability services sector.

Get ready for referral

Queensland private sector employers who currently operate within the State industrial relations system need to prepare themselves for the inevitable transition to the federal system. Once the referral begins, transferring employers will be subject to the new safety net of basic entitlements in the National Employment Standards.

While the timing is uncertain, according to the Minister’s second reading speech, the Government is aiming to pass the legislation and complete the referral in time for the commencement of the National Employment Standards and modern awards, from 1 January 2010.

Entitlements that will change for many employers still operating in the Queensland system will include, for example, an increased annual personal (sick/carer’s) leave entitlement and, as an entirely new entitlement for many workers, default redundancy benefits.

Transferring employers will need to ensure that their present arrangements with their employees - be they governed by common law contracts, certified agreements or awards - comply with the new safety net. In many cases it will be necessary to update common law contracts of employment to bring a range of provisions into line with the federal system.

Failure to do so could result, in the worst case, in prosecution and the imposition of penalties. Short of that, employment arrangements that are out of sync with the federal system will have the potential to cause angst in a variety of ways, ranging from unforseen liability for wages and related entitlements through to confusion and uncertainty with such things as leave entitlements and dispute resolution mechanisms.

For more information on the Fair Work (Commonwealth Powers) and Other Provisions Bill 2009, please contact HopgoodGanim’s Industrial and Employment Law practice. The team can help you audit your existing systems and processes for compliance against the new federal safety net, as well as a range of other compliance and litigation risk areas.