Fair Work Act?

jill-murray Dr Jill Murray
Email: jill.murray@latrobe.edu.au

So the Work Choices revolution has come and gone, taking with it a Prime Minister and his Government, along with many long-standing features of traditional Australian labour regulation. The Rudd Government's labour law, the Fair Work Act, came into effect on the first of January 2010. Fair Work Australia (FWA), the Government's re-engineered Australian Industrial Relations Commission, has commenced work.

Are there any early indications of real change? It's early days, but there are interesting developments in the application of the new laws.

In one recent case, a health sector employer and unions sought approval under the new Act for an enterprise agreement covering some 1600 workers. The agreement contained a 'preferred hours' clause: a worker could ask to work more hours than their normal roster, and if the employer agreed, these additional hours would paid as ordinary time. Only employer initiated overtime would receive the higher overtime

FWA had to determine whether this agreement leaves workers better off than they would have been without it. This assessment is made by comparing the agreement with the legislated standards in the Fair Work Act. The key working time rule is a maximum of  38 hours per week plus 'reasonable additional hours'. So far, so Work Choices. But the Rudd Government has added another regulatory layer: FWA must also assess the agreement against award terms which may mandate overtime payments for work in excess of 38 each week for some categories of workers. Generally, managers, professionals and those whose work is 'unmeasured' are not subject to overtime regimes under the new system.

Commissioner Greg Smith decided that the enterprise agreement should not be approved in its current form. There was a possibility that the agreement would undercut the 38 hour week, especially if individual workers were 'encouraged' by the employer to state a preference for longer hours without overtime pay.  While the Act permits FWA to balance out the costs and benefits to workers of proposed agreements, the Commissioner decided that minimum protections of working time were so fundamental to the operation of the Fair Work system that the agreement in its present form had to be rejected.

In some ways, Commissioner Smith's decision is unremarkable: before Work Choices, members of the Australian Industrial Relations Commission were required to carry out this kind of assessment. However, the Work Choices interregnum changed the terms of national debates about workplace flexibility: overnight, the virtually complete deregulation of hours of work was legal possibility (and a practical reality for some vulnerable workers). Now, the Rudd government's bulwarks against this total freeing up of working time - the principle of the 38 hour week plus reasonable additional hours, supplemented by award provisions on overtime and penalty rates for a minority of workers - can be seen in stark relief.

If the decision is upheld on appeal, the Fair Work regime appears to provide strong systemic support for certain principles of fair and flexible working time. 'Fair' because workers have the benefit of limitations on their hours of work; 'flexible' because these limits can be extended, but at an additional cost to the employer. And individual workers who want to contract out of their right to overtime can still do so if they sign an 'individual flexibility agreement' with their employer.

A similar clash between principles and preference is seen in the current controversy over the loss of 'small jobs' in the retail sector because of award provisions requiring minimum daily hours of work. A country town hardware store that employs school kids for one and a half hours each afternoon now finds itself in breach of a provision requiring at least two hours engagement. Other businesses in the same town (such as the petrol station covered by a different industry award) are not faced with the same requirement of a minimum of two hours' work. Minimum hours rules are designed to protect workers not from the undesirable extension of working time, but the fragmentation of jobs in ways that endanger decent work and a civilised life.

In effectively prohibiting certain forms of working time, the Fair Work regime is cutting into the almost total flexibility available to employers in work scheduling under Work Choices. Participants now find that flexibility must be mediated through an over-arching framework of principles and protections. For the first time, the Government is being exposed to attack based on the alleged human, economic and political consequences of these prohibitions. And in this election year, we can expect to hear a lot more about the developing nexus between fairness and flexibility and the Fair Work Act's role in its construction.