Clarity needed on IR

A booming economy, militant construction unions and the biggest regulatory change in a century have combined to make workplace relations one of the busiest practice areas for Perth’s law firms.

The major task currently facing lawyers is explaining the ramifications of the federal government’s Work Choices reforms, which took effect on March 27.

“It is the biggest change to our IR system that we have ever seen and the biggest theme coming through is confusion,” Sparke Helmore partner Greg Smith said.

A similar view is expressed by Gadens Lawyers partner Allan Drake-Brockman.

“Most employers don’t have any real detail,” he said. “My impression is that they don’t know a lot about it.”

Mr Smith believes a lot of the complexity flows from “really confusing” transitional provisions but expects the system, when it eventually settles down, will be a lot simpler.

Mr Drake-Brockman agrees that the changes have been “unnecessarily complex” but believes they are manageable and that the new system offers “huge benefits” to employers who make new enterprise-level agreements.

A lot of the initial Work Choices publicity surrounded claims that employers would have almost unfettered power to sack workers and cut pay and conditions.

Lawyers agree this is not the case, and in some cases employers may have to actually improve their existing conditions of employment.

Jackson McDonald partner Maria Saraceni said this was most likely to occur with employees on common law contracts.

She said some existing contracts had automatic cashing-out of all annual leave entitlements or did not allow unused sick leave to accrue. Both would be illegal under Work Choices.

Another issue that has arisen, particularly in Western Australia, is the practice of real estate agents and mortgage brokers having commission-only employees.

Mr Drake-Brockman said Work Choices specified that all employees needed to receive a minimum rate of pay.

Attempts to obtain an exemption for mortgage brokers and real estate agents – similar to the exemption they previously had under state legislation – have not been successful.

The High Court challenge mounted by state Labor governments against the new legislation has created some uncertainty.

Like most lawyers, Ms Saraceni does not expect the challenge to succeed, but said it still created an element of doubt.

An added cause of confusion was the modifications being introduced by the federal government to deal with some of the problems that have emerged with the new legislation.

Mr Drake-Brockman said a notable example was the decision to exempt employees earning $55,000 or more from new record-keeping requirements.

One of the first questions many employers asked was whether they were covered by the federal legislation.

Mr Drake-Brockman believes the coverage is clear – it applies to all ‘constitutional corporations’, including companies and family trusts with a corporate trustee, leaving only sole traders, partnerships and some parts of the state public service exempt.

Mr Smith believes coverage is not so clear.

“In the middle there are family trusts with a controlling proprietary entity that they run their business through, and we can’t get clarity as to whether or not they are covered,” he said.

“There is huge concern out there that businesses can’t get a handle on whether this legislation applies to them.”

Mr Drake-Brockman cautioned employers to ensure they complied with the new unfair dismissal rules.

For instance, there were still grounds for employees to claim unlawful termination.

He suspects there may also be a rise in other forms of litigation, such as discrimination or harassment claims.

Mr Drake-Brockman also said care needed to be taken in constructing new workplace agreements, since “there is a fair bit of devil in the detail”.

Mr Smith said the new rules clearly made it harder for unions to take industrial action, but noted that they retained a lot of influence over safety matters.

“I think we are going to see an increasing overlap between safety and IR,” he said.

One aspect of Work Choices that has received little attention is the ability of the newly established Office of Workplace Services to commence legal action against both unions and employers engaged in unlawful action.

The Australian Building and Construction Commission has similar powers.