Australia - Fair Work Act 2009 - Important changes affecting the hotels and tourism industry

For the hotel industry, two of the most critical changes are (i) all employers and employees will need to be aware of (and comply with) the two new hospitality-specific awards: the Hospitality Industry (General) Award 2010 and the Alpine Resorts Award 2010 which will replace most current existing Federal and State awards; and (ii) the threshold that previously applied to the unfair dismissal regime (businesses that engage 100 employees or more) has now been lowered to "small business employers" who employ more than 15 FTE employees, meaning far more small businesses will now fall within the regime.

New institutions

From 1 July 2009, the Australian Industrial Relations Commission (AIRC) has been replaced by Fair Work Australia (FWA), and the Workplace Ombudsman has been replaced by the Fair Work Ombudsman. FWA will become a "one-stop shop" for employees and employers by providing advice on all workplace relations issues and ensuring the enforcement of legal entitlements.

National Employment Standards

From 1 January 2010, the current Australian Fair Pay and Conditions Standard (AFPCS) will be replaced by the National Employment Standard (NES).

The NES provides for minimum terms and conditions of employment. Major differences from the current terms of the AFPCS include:

• a right for employees who have taken unpaid parental leave to request a further period of up to 12 months, which can only be refused on reasonable grounds;

• a right for employees who are the parent or carer of a child under school age, or a child under 18 who has a disability, to request flexible working arrangements, which can also only be refused by the employer on reasonable grounds;

• the provision of community-service leave where an employee is summoned for jury duty or participates in emergency management activities such as volunteer fire brigades;

• a standard severance/redundancy scale applicable to all employees;

• a requirement that any request by an employer for an employee to work on a public holiday must be reasonable; and

• a requirement for all employers to provide their employees with a Fair Work Information Statement.

Industrial relations

The Fair Work Act dramatically alters the bargaining framework for employers, employees and employee/employer representatives, including:

• a restored collective bargaining process which will become the primary method of agreement making;

• revised procedural requirements for the making of such agreements, including a stricter test for the assessment of collective agreements by FWA called the "Better Off Overall Test"; and

• a positive obligation on bargaining representatives to bargain in good faith.

Existing collective agreements, Australian Workplace Agreements (AWA) and Individual Transitional Employment Agreements (ITEA) continue to operate on a transitional basis. New AWAs cannot be made, and new ITEAs can only be made prior to 31 December 2009 by employers who were using AWAs as at 1 December 2007.

Such transitional instruments, and new collective agreements entered into under the Fair Work Act, will exclude the operation of an applicable Modern Award (discussed further below) for most purposes.

However, if the wage rates in such an instrument are less than the minimum wage rates provided under the applicable Modern Award, the minimum rates of pay in the Modern Award will apply to the employee.

Modern Awards

The Fair Work Act also provides for standardised and simplified Modern Awards, as a result of the rationalisation of thousands of awards into industry or occupationally specific Modern Awards by the AIRC prior to 1 January 2010. With limited exceptions, Modern Awards will commence operating from 1 January 2010 and replace most current Federal awards and Notional Agreements Preserving State Awards.

The introduction of Modern Awards will mean that the minimum terms and conditions applicable to individual employees may change from 1 January 2010.

The AIRC has already made a variety of Modern Awards, including the Hospitality Industry (General) Award 2010 (Hospitality Award) (which will apply generally to employees who work in most hotels, motels and resorts) and a specific Alpine Resorts Award 2010 (Alpine Resorts Award).

These two awards prescribe minimum terms and conditions for the full range of hospitality employees, including food and beverage, kitchen, guest services, administration, security, leisure activities, stores, maintenance, casino and managerial staff. The Alpine Resorts Award also deals with roles such as ski instructors and lift operators.

Both awards contain detailed provisions dealing with:

• the circumstances in which employers and employees can enter into individual flexibility arrangements (as discussed below);

• job classifications;

• hours of work and breaks;

• minimum wage rates, including overtime, penalty rates, allowances, annual leave loading, and casual loadings;

• rights for some casuals to elect to become permanent employees;

• transitional redundancy entitlements;

• superannuation; and

• employee accommodation and meals.

The terms of the Hospitality Award and the Alpine Resorts Award are broadly similar, including in relation to the prescribed minimum wage rates. However, the job classification structures in the Alpine Resorts Award are quite different to those in the Hospitality Award. The Alpine Resorts Award also makes specific provision for seasonal work (including increased minimum wage rates for seasonal employees).

The Fair Work Act sets out the circumstances in which Modern Awards will not apply to an employer or employee. For example, a Modern Award will not apply to an employee who accepts a written "high income guarantee" (i.e. a guarantee from their employer that their annual income will exceed the prescribed amount, currently $108,300 per annum indexed). Individual Modern Awards may also provide for specific exemptions from their terms.

Employers have a limited right to enter into individual flexibility arrangements, which allow individual employers and employees to "contract out" of certain clauses in applicable Modern Awards and enterprise agreements. An employer will need to ensure that any individual arrangement results in the employee being better off overall, and these arrangements may be terminated by either party providing written notice of not more than 28 days or by agreement.

Unfair dismissal, unlawful termination and adverse action

The Fair Work Act does not change the fundamental principle that a dismissal will be unfair if it is found to be "harsh, unjust or unreasonable". However, the Act does introduce a number of important changes to the unfair dismissal regime, including:

• allowing employees only 14 days to commence unfair dismissal proceedings;

• removal of the exemption for businesses that engage 100 employees or less, which will be replaced by a new system applicable to "small business employers" who employ less than 15 FTE employees;

• a qualifying period of 12 months for small business employees, and six months for all other employees; and

• limitations on the ability of employers to avoid unfair dismissal claims on the grounds of redundancy of the employee's position.

The Fair Work Act retains protections against unlawful terminations, but implements a new ground of legal action under the "general protections" section of the Act relating to "adverse action". This permits a person (including an employee, a potential employee or an independent contractor) to commence legal action where they have been subjected to detriment by a company, such as termination, failure to hire, demotion or alteration of the employee's position. A relevant adverse action may include action taken due to:

• the person's exercise of, or right to exercise, a workplace right, such as any benefit under a workplace law or a right to initiate legal proceedings or make a complaint;

• the person engaging in, or not engaging in, lawful industrial activity; and

• the person's race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer's responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

This publication has been prepared for the general information of clients and professional associates of Baker & McKenzie. You should not rely on the contents.It is not legal advice and should not be regarded as a substitute for legal advice. To the fullest extent allowed by law, Baker & McKenzie excludes all liability (whether arising in contract, negligence or otherwise) in respect of all and each part of this document, including without limitation, any errors or omissions.

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