Modern Awards may result in increased wages for some small businesses

It’s true the Modern Awards that will apply to these businesses will impose higher penalty rates then the current award. This is because the Modern Awards are to apply to an industry and don’t take into account the sizes of businesses in that industry – large and small businesses are subject to the same conditions. This will cause an increase in the cost of employees and to some businesses may be detrimental to their survival.

It’s also true that by entering into a Collective Workplace Agreement prior to 31 December 2009 a business can delay the onset of the Modern Award to their business for the life of the Collective Agreement. This is because a Collective Agreement lodged before 31 December 2009 will be assessed against the current award. Once approved, it will override all awards, even the Modern Awards, until such time as the Collective Agreement is terminated or replaced with a new agreement. It will not however, override the new National Employment Standards that start on 1 January 2010 providing the minimum entitlements for all employees with regard to hours of work, minimum wage, leave, public holidays, notice of termination, redundancy and flexible work arrangements.

It’s very important that employers get the right advice before jumping into a Collective Agreement. You need to make sure the agreement suits your business – your workplace and your employees. It needs to refer to the correct awards and comply with legislation. These are legal documents and should be prepared by lawyers with industrial law experience. Given the amount of time it’s taking for the Workplace Authority to approve a Collective Agreement, it’s likely that even an agreement lodged well before 31 December 2009 will not be approved before 1 January 2010. If it fails the No Disadvantage Test, you get one chance to fix it before the agreement fails and you have to start again. Unfortunately, by now 1 January 2010 will have passed and your next agreement will be assessed against the Modern Award – the window of opportunity will have closed. Therefore, it’s very important to get it right the first time.

Another thing to note, is that it’s still possible (although slim) that the Government will concede there is a need for a separate Modern Award to cover these businesses that’s more in line with their current awards.

KEY POINT: Don’t rush in. Collective Agreements don’t need to be lodged before 30 June 2009 unless it’s considered the bargaining laws from 1 July 2009 will affect your business, e.g. the union will be on your door. If you have no union involvement, the new bargaining laws should not cause too much grief.

Collective Agreements can be lodged right up until 31 December 2009. More will be known about the Modern Awards as the year progresses. If the Modern Award (as currently published) is not changed, or a new one made for smaller business, then these smaller employers are best to enter into a Collective Agreement and should start organising this by early-October at the latest.

Bargaining in good faith

From 1 July 2009, parties negotiating a workplace agreement, will need to ensure they bargain in ‘good faith’. Good faith bargaining is about promoting open communication in the workplace. There was no requirement under WorkChoices to bargain in good faith. However, under the Fair Work Act parties will be required to bargain in good faith and this will include:

• attending and participating in meetings
• disclosing relevant information 
• giving genuine consideration to proposals and bargaining representatives and responding to them in a timely manner with reasons, and
• refraining from unfair or difficult conduct that undermines freedom of association or collective bargaining.

The new bargaining laws will be more onerous on the parties then the current laws. They will also open the process up to union involvement e.g. where just one employee wishes the union to be a party to the agreement, the union can apply to Fair Work Australia (FWA) to be included as a party.

The intention is for FWA not to be heavily involved in the agreement making process, however, where a party refuses to bargain, FWA may make bargaining orders requiring them to bargain. If these orders are ignored then FWA may in extreme circumstances arbitrate and make a workplace determination. Arbitration is a last resort and may be used, for example, where an employer refuses repeatedly to recognise a bargaining representative, or seriously and repeatedly ignores the bargaining process. However, a party will not be required to accept an agreement they do not wish agree to.

KEY POINTS: Negotiating a workplace agreement after 1 July 2010 may take longer due to the degree of consultation required and may lead to direct union involvement particularly if some employees are union members. If there is no union involvement, and employers have a good relationship with employees, the new bargaining laws should not cause too much grief.