The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020 (the Bill) was introduced into Federal Parliament on 9 December 2020.
The Bill seeks to simplify and streamline the currently complex enterprise agreement approval process. Significantly, the Bill proposes to reform the Better Off Overall Test (BOOT), giving the Fair Work Commission (FWC) greater discretion in the approval of enterprise agreements. Other key features include easing the approval requirements, accelerating the approval process, and restricting who can vote.
Simplifying the BOOT
Under the current BOOT test, employers must identify terms which are more beneficial or less beneficial to each and every employee, than corresponding terms under an applicable modern award.
The FWC has often considered hypothetical working arrangements when deciding whether to approve an enterprise agreement which has led to delays. The revised BOOT would be simplified to only take into account patterns or kinds of work or types of employment that are currently engaged in or are reasonably foreseeable.
The FWC may also have regard to the overall benefits (including non-monetary benefits) received under the agreement compared to a relevant modern award. Additionally, significant weight will be given to any views related to passing the BOOT expressed by employers, employees, and bargaining representatives.
Perhaps most controversially, the FWC will be able to approve an agreement that does not pass the BOOT if it is appropriate to do so in the circumstances, taking into account:
- the views and circumstances of the employees and employer;
- the impact of Covid-19;
- the extent of employee support for the agreement; and
- whether the approval is in the public interest.
Any agreement approved under these circumstances will be limited to two years’ duration. This Covid-19 clause is a sunset provision and will expire two years after the amendments are introduced.
Who can vote?
The Bill intends to reduce the number of persons eligible to vote to full and part-time employees employed at the time of the request to vote, and casual employees who perform work during the seven-day access period.
Pre-approval requirements
The Bill would introduce a requirement that employers take reasonable steps to ensure relevant employees are given a fair and reasonable opportunity to decide whether to approve the agreement. Additionally, the obligation to give employee’s notice of their representational rights will be extended from 14 days to 28 days.
Approval in 21-days
If the proposed reforms are implemented, the FWC will be required to, as far as practicable, determine approval applications within 21 working days. This is intended to shorten the approval process and provide more certainty to employers seeking approval.
Other amendments
The Bill also intends to:
- limit the right of additional parties to be heard in “exceptional circumstances”, which will include unions at the approval stage unless they are a bargaining representative;
- allow franchisees to opt-in to a current single enterprise agreement;
- prevent employers from applying to terminate an enterprise agreement until three months after the nominal expiry date;
- introduce a mandatory National Employment Standards interaction term, which will be implied if not expressly included in an agreement.
The Bill has been referred to the Senate Education and Employment Legislation Committee for inquiry and report by 12 March 2021.
Key take-aways
- Given the response to some parts of the Bill, it remains uncertain which aspects will ultimately become law when passed.
- Employers should have regard to the proposed reforms and timing as part of their industrial relations planning for 2021.
If you would like to know more about the Australian Government’s proposed reforms on enterprise bargaining and how they might impact your employee negotiations, please contact our Employment and Workplace Relations team on (08) 9321 0522.
