Work Choices reforms
On 7 December 2005, Federal Parliament passed the Workplace Relations Amendment (Work Choices) Bill 2005, which is said to contain the most significant changes to the regulation of industrial relations in Australia since 1904, when the Federal industrial relations system was established. The reforms rely, controversially, on the corporations power in the Constitution to largely increase the coverage and change the content of the Federal system. The reforms are expected to commence some time in March 2006.

High Court challenge
The NSW Government and other State Governments are challenging the constitutional validity of the legislation in the High Court. The basis for the challenge is that the corporations power does not support industrial relations laws of the kind that have been enacted. The case is likely to be heard in May 2006 but it may not be decided until 2007.

Coverage of new Federal system
With a view to creating a single national industrial relations system, the Federal system will be extended to cover all constitutional corporations and their employees. The various State industrial systems will be excluded from covering these employers and employees. The new Federal system will cover up to 85 per cent of employees in Australia but coverage will be lower in some States (about 75 per cent of employees in NSW).

Changes to award wages
Award wages will be adjusted by a new body – the Australian Fair Pay Commission – rather than by the Industrial Relations Commission. The Fair Pay Commission will operate according to different parameters and it will undertake research and consult with relevant stakeholders rather than arbitrating in the context of competing claims by unions and employer organisations. The Government has said that the Fair Pay Commission will ensure that the unemployed and low paid are not priced out of the labour market. Critics believe that real minimum wages will fall and that this will not lead to employment growth.

Changes to award conditions
Certain employment conditions can no longer be included in awards, including those covered by the new Australian Fair Pay and Conditions Standard and those relating to long service leave, notice of termination, jury service and superannuation. However, provisions in existing awards relating to these matters will continue to have effect. Another change is that awards cannot require small businesses to make redundancy payments.

Changes to legislative conditions
There is a new set of four legislative minimum conditions relating to: maximum ordinary hours of work, annual leave, personal/carer’s leave and parental leave. These four conditions will, together with minimum wages, comprise the Australian Fair Pay and Conditions (AFPC) Standard. The conditions in this Standard will apply to all employees covered by the Federal system. Employees who are covered by an award will continue to be entitled to their award conditions if those conditions more generous than the Standard.

Changes to workplace agreements
The most significant change is that workplace agreements no longer need to pass the nodisadvantage test (an agreement would not pass this test if it disadvantaged an employee compared to their award wages and conditions). Workplace agreements will only need to comply with the minimum wages and four minimum conditions in the AFPC Standard. The Government argues that this will enhance choice and flexibility in agreeing on wages and conditions, which will increase productivity, leading to a stronger economy and higher living standards. Critics argue that most employees lack bargaining power and that they will lose important entitlements (eg overtime and penalty rates), which will be detrimental to their living standards and their ability to balance work and family commitments.

Changes to industrial action
Unions and employees will not be able to take lawful industrial action when negotiating a workplace agreement unless this has been authorised by a majority of employees, voting by secret ballot. In addition, the Industrial Relations Commission can now prevent industrial action during negotiations if it is causing significant harm to a third party. The Minister now also has the power to stop industrial action which is threatening health, safety or the economy. The Government argues that secret ballots will ensure that industrial action is a genuine choice of the employees involved and that the other changes recognise the legitimate interests of those affected by industrial action. Critics argue that the changes will severely restrict employees from taking action, weakening their bargaining power.

Changes to dispute resolution
The century -old system of compulsory conciliation and arbitration is to be abolished. The Industrial Relations Commission will become a voluntary dispute resolution body and parties will also be able to refer disputes to private dispute resolution services.

Changes to unfair dismissals
The most significant change is that businesses with up to 100 employees will be exempt from unfair dismissal laws. The Government argues that unfair dismissal laws discourage employers from putting on more staff and that the exemption will create thousands of jobs and a stronger economy. Critics argue that there is no valid evidence to support the Government’s claim about the link between unfair dismissal laws and employment. Critics also argue that, in any event, there is a powerful case for the continued operation of laws that protect workers against arbitrary or unfair deprivation of their livelihood.

General debate about reforms
The Federal Government and business groups argue that the reforms will reduce complexity and give employers and employees more choice and flexibility in setting their wages and employment conditions. This, it is argued, will lead to greater productivity and a stronger economy, which will result in more jobs, higher wages and better living standards. Critics (which include trade unions, many academics, welfare groups, and State Governments) argue that the Government has not made out the economic case for the reforms. They also argue that the reforms tilt the balance of power too far in favour of employers; and that, over time, the reforms will lead to lower wages and reduced working conditions, which will mean decreasing living standards and greater difficulty in balancing work and family life. They argue that the reforms are likely to impact hardest on vulnerable workers such as women, indigenous Australians, employees with a disability and young people.