Industrial relations in 2012

2012 is shaping up to be a very big year in industrial relations. Employers are waiting in anticipation for a number of developments which will no doubt present various opportunities and challenges for their businesses.

This article looks at the top seven developments to watch out for in 2012. Freehills will be analysing these particular issues and developments in the bargaining space generally, in further detail later in the year through seminars and newsletters on the key ‘issues and trends’ for bargaining in 2012 and Freehills’ anticipated third volume of Bargaining under the Fair Work Act, which will provide a comprehensive analysis of bargaining-related decisions over the past 12 months (scheduled for publication in July 2012).

February - The Fair Work Review

Initial submissions for the the Fair Work (Act) Review close on 17 February 2012. The terms of reference, and a background paper, have been released. The Review presents both opportunity and risk for employers, as stakeholders are likely to pursue wide-ranging amendments to the Act as part of the review process. Whether the Review will ultimately result in any substantive changes remains to be seen.

February - Appointment of a new President

The President of FWA, Justice Geoffrey Giudice, has announced his retirement, which will take effect by the end of February. As a result, there is much speculation as to who will be appointed as Justice Giudice’s successor. At the time of writing, no official announcements have been made, but they are no doubt imminent.

February and March - From the High Court and Full Court (Rio Tinto, JJ Richards, Barclay, and ADJ Contracting)

In February, Rio Tinto will seek special leave to appeal to the High Court against a Federal Court decision that held an employee collective agreement (ECA) was not validly made. The decision potentially calls into question the validity of some ECAs made under the Workplace Relations Act 1996 (Cth) by reference to their defined scope. Also in February, the Federal Court will hear an appeal against a Full Bench of FWA in the JJ Richards case. The court will be called to determine whether protected action ballot orders are able to be applied for and made before bargaining actually ‘commences’.

In March, the High Court will hear the appeal of the Barclay decision, which will consider the Act’s general protections provisions. In Barclay, a majority of the Full Court of the Federal Court found that, despite evidence the decision-maker’s subjective reasons for taking disciplinary action against an employee did not involve any ‘prohibited’ reason, what was important was whether objectively it seemed that the action was taken because of a prohibited reason. This meant that the court could take into account ‘unconscious’ motivations of the decision-maker. As a result, there was some concern by employers that the bar had been substantially raised and that it would be difficult to successfully defend adverse action claims going forward (particularly in relation to conduct by union delegates in the workplace). This is likely to be the most anticipated decision of the year.

Later in 2012, the Federal Court is likely to hear an appeal against a Full Bench of FWA in the ADJ Contracting case. The case relates to a number of clauses that are common in Fair Work Enterprise Agreements, including clauses that require contractors to be engaged on terms no less favourable than those that apply to employees under the agreement, as well as clauses relating to right of entry, and encouragement of union membership.

March - Review of modern awards

FWA will be conducting a review of all modern awards, including their transitional arrangements. This process presents an opportunity for employees to seek variations of modern awards if they do not achieve the modern awards objective, are not operating effectively or have anomalies or technical problems.

Any application to vary a modern award as part of the review must be filed by 8 March 2012 and should contain: grounds in support of the application, a brief outline of the submissions to be made and statements of any evidence to be called.

Employers wanting to take part in the review should commence preparation early - the timeline is tight, and FWA is unlikely to make any such variations lightly.

Throughout 2012 - Modernisation of enterprise awards

Employers or relevant unions who were party to an existing enterprise-specific award have until 31 December 2013 to apply to FWA to have the enterprise award ‘modernised’ for continuation after that date. In the absence of such an application the enterprise award will terminate.

Employers with enterprise awards will need to consider the timing of any application very carefully and ensure that if an application is to be made, there is sufficient evidence prepared that justifies modernisation rather than termination. For example, on 18 November 2011, the Federal Court handed down its decision in Yum! Restaurants, in which two employers had sought to challenge the decisions of FWA to terminate, rather than modernise, two enterprise awards. The decision reinforces the strict approach courts will take in reviewing decisions of FWA and highlights the hurdles for employers seeking to retain coverage under enterprise awards.

Throughout 2012 - Opting out of enterprise agreements

Late in 2011, a Full Bench of Fair Work Australia (FWA) handed down its decision in Newlands Coal. This decision confirmed the legitimacy of ‘opt-out’ clauses in enterprise agreements provided that there are sufficient controls within the agreement to ensure that employees remain ‘better off overall’. There will no doubt be continued scrutiny of such arrangements, both from the perspective of employers and unions, throughout 2012.

Throughout 2012 - The legitimacy of the lock-out

Late 2011 saw a renewed focus by employers on strategies to mitigate industrial action and increase bargaining leverage. There appears to have been an increased willingness on the part of employers to consider locking out employees as a legitimate and necessary response to damaging industrial action.

This trend is likely to continue into 2012, together with an increased focus on good faith bargaining strategies, given their potential to significantly (and legitimately) advance an employer’s bargaining agenda (particularly given the demonstrated difficulty in achieving suspension/termination of industrial action in the event of harm).

*Paul Burns is a partner in Freehills’ Employee Relations practice and Rohan Doyle is a Solicitor at Freehills.