Evolution of the Fair Work System

Date: 22 February 2011Presented by: Cliff Pettit

Evolution of the Fair Work System

Date: 22 February 2011Presented by: Cliff Pettit

Program Overview

• Evolution of the ABCC

• Transitions – 27 March 2011

• Continued application of the FW Act

• Sham Contracting

Our Role

• Promoting appropriate standards of conduct

• Instituting proceedings against those who contravene the law;

• Investigating possible contraventions of relevant laws, the National Code of Practice and industrial instruments; and

• Providing advice and assistance to building industry participants.

The ABCC improves the workplace relations framework of the building and construction industry by:

History

• Cole Royal Commission

• Final Report of the Cole Royal Commission

tabled in Parliament 26 & 27 March 2002

• Building Industry Taskforce (BIT)

• Established in October 2002 in response to the findings of the Cole Royal Commission

• Operated until ABCC established

• ABCC

• Established on 1 October 2005

• New Commissioner 11 October 2011

ABCC Executive

ABC CommissionerLeigh Johns

Key Regulatory Issues

• North West shelf of WA

• National Broadband Network

• Rebuilding Queensland

• Ongoing cultural reform

Full service regulator

• The mission of the ABCC is to become a ‘full service regulator’ in the building and construction industry.

• Our aim is to bring about ‘fair and productive’ building and construction work.

• Productive - eliminating unlawful industrial action and barriers to participation.

• Fair - harmonious, equitable practices on site.

• High visibility regulator.

What do we do?

• Providing reporting facility through the 1800 Hotline

• Conducting site visits to educate and investigate

• Increasing ABCC presence in the construction industry

• Monitoring behaviour and enforcing laws

• Encouraging a positive cultural change toward the ABCC and lawful compliance amongst the industry

Our activities include:

A transparent regulator

• We will continue to be a tough ‘cop on the beat’, in a way that is open, and transparent.

• Have published a:

• Litigation Policy;

• Investigations Policy; and

• Undertakings Policy.

• More will be published.

Section 52

• Continuing need to use section 52 examinations.

• Tribe decision - need to put in place new delegations.

• Need to use section 52 examinations would diminish if employers and their staff voluntarily assisted the ABCC in its investigations.

• These requests account for nearly 35% of examinations.

• Sub-contractors can continue to expect protection through the use of section 52.

Transitions – March 2011

• A number of instruments have sunset clauses in place, including:

• NAPSAs

• Division 3 pre-reform certified agreement

• Old IR Agreements – 27 March 2011

• Section 170MX Awards – 27 March 2011

• Schedule 6 instruments (Sch. 20 TPCA)

Div 3 Certified Agreements

• Cover excluded employers

• Constitutional corporations bound by Div 3s had their agreements deemed to be pre-reform collective agreements

• Terminate 27 March 2011

• Parties will revert to State system

Notional Agreements Preserving State Awards

• NAPSAs only apply to constitutional corporations

• Operate in conjunction with transitional wage instrument

• NAPSA terminates on 1 January 2014

• Cease to cover employees who become covered by a Modern Award (aside from MMA)

• NAPSA may still cover some employees

• FWA conducting process to terminate NAPSAs and pre-reform awards (Not Sch 6 Awards)

Schedule 6 Awards – March 2011

• Originally (2006) called Transitional Awards

• Cover non-constitutional corporations

• Have had wage rates updated by AIRC, based on AFPC decisions

• Terminate 27 March 2011

• Parties will revert to State system

Ongoing Application of FW Act

• FW Act contains provisions that will continue to apply to employers reverting to State system, specifically:

• Part 3-1 General Protections

• Part 6-3 NES elements

• Part 6-4 Termination of employment elements

NES/Termination of employment

• Part 6-3 extends the NES entitlements to unpaid parental leave (and related entitlements) and notice of termination (or payment in lieu of notice) to all employees.

• Part 6-3 does not exclude applicable State laws that provide these entitlements and are more beneficial than the NES.

• Part 6-4 provides protection against unlawful termination to all employees.

General Protections

• Part 3-1 is designed to:

• protect workplace rights and freedom of association; and

• provides protection against discrimination and sham contracting arrangements.

• Applies to action taken by any person that affects, is capable of affecting, or is taken with intent to affect the activities, functions, relationships or business of a national system employer or an organisation.

General Protections – Sham Contracting

• Fair Work Act 2009 prohibits:

• misrepresenting employment

• dismissing or threatening to dismiss to re-engage

• misrepresenting to re-engage (Div. 6, Part 3-1)

• civil penalty ($6600/$33,000) plus injunction, compensation or reinstatement (s. 539-545 FW Act)

Broader Issues

• Sham contracting exists when people who ought to be treated as employees are treated as independent contractors.

• Sham contracting can mean employees miss out on legitimate entitlements like annual leave and long service leave. 

• ABCC has a role in ensuring all employees receive their lawful entitlements.

• Also adversely affects decent employers by placing them at a competitive disadvantage.

Cole Royal Commission

• High levels of incorporation and ABN by Building and Construction Industry Contractors ....“supports the view that there may well be significant illegitimate contracting (paragraph 276, Report)

• Approximately 9% (1 million) of all Australian workers (in main job) identified as Independent Contractors

- eighth largest employing industry

• 33% most likely in Building & Construction industry

• - highest (next is professional/scientific/technical services 14.6%)

Issues of Concern about Sham Contracting

• Cole identified evasion of employer responsibilities, including

• payroll tax, workers compensation and OH&S;

• National employment standards

• Unfair dismissals

• Awards & Agreements

• Superannuation

• Evasion by workers of taxation obligations

Sham Contracting Inquiry

• On 19 November 2010 announced the Sham Contracting Inquiry. 

• On 22 December 2010 released discussion paper.

• The ABCC invites interested persons to submit a written response to the discussion paper by Monday, 7 March 2011.

• Roundtables will be held in Sydney, Melbourne, Brisbane, Canberra and Perth commencing in late March 2011. 

• Each roundtable will be hosted by an expert panel of invited guests.

• Public fora that will provide attendees the opportunity to examine strategies to address sham contracting in the building and construction industry.

Key Questions for Consideration include:

• What is the extent and nature of sham arrangements in the building and construction industry?

• What factors are relevant in determining whether a construction worker is an employee or a contractor?

• How well are the differences between contractors and employees understood in the industry?

• To what extent are labour hire arrangements essential to the efficient functioning of the building and construction industry?

• How could the ABCC assist all stakeholders in the building and construction industry to ensure labour hire and contracting practices are both fair and efficient?

Expected outcomes

• Final report to be released by 30 June 2011.

• Information obtained will inform future educative and compliance activities of the ABCC.

• Individuals and stakeholders are invited to participate by attending and Sham Contracting Roundtable Inquiry or providing a written submission at www.shamcontractinginquiry.gov.au

Views Invited:

• Statistical profile

• Employee vs Contractor

• Labour hire arrangements

• Fairness of bargaining positions

• Evasion by employers of responsibilities to employees and others

• Evasion by workers of taxation obligations

• Regulatory framework & regulatory agencies

Contact details

ABCC Helpline - 1800 00 33 38

7:00am – 7:00pm Eastern Standard Time7 days a week

Cliff Pettit

Australian Building and Construction Commissioner

Telephone : (08) 9238 9708

Email : clifford.pettit@abcc.gov.au

Questions