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States agree to refer industrial relations powers

The Workplace Relations Ministers’ Council (WRMC) has released a communiqué announcing that South Australia, Tasmania and Queensland have agreed to join Victoria in referring their industrial relations law-making powers to the Commonwealth.

Implications for employers

Once effective, the States’ referrals to the Commonwealth of powers to make laws about industrial relations will provide greater certainty and consistency for employers, effectively reducing compliance red tape for interstate and national businesses operating in those jurisdictions. The referrals will also bring the Commonwealth Government closer to creating a unitary, national industrial relations system.

Current arrangements

The scope of the Fair Work Act 2009 (Cth) is limited by the Commonwealth’s constitutional law-making powers. Accordingly, the Act only affects employment by, generally, foreign, trading or financial corporations; the Commonwealth Government and Commonwealth authorities; flight crew, maritime and waterside workers; and employment in the territories. This leaves many other employers, such as unincorporated entities, partnerships and sole traders, as well as various State public sector employees, subject to State workplace relations regimes.

The Commonwealth Government must rely on the States to refer their industrial relations powers to it, in order to secure a comprehensive national industrial relations regime. To date, Victoria has been the only State to refer the bulk of its powers to the Commonwealth, such that all private sector employees in Victoria have for years been covered by the Commonwealth regime in respect of most industrial relations matters (excepting specified matters such as long service leave and occupational health and safety, in relation to which Victorian law still applies).

The referrals

South Australia and Tasmania have both agreed “in principle” to refer their industrial relations powers to the Commonwealth from 1 January 2010, with the exclusion of industrial relations in connection with State public sector employees.

In addition, Victoria has already legislated to continue refer its powers to the Commonwealth: like its predecessor referral legislation, the Fair Work (Commonwealth Powers) Act 2009 (Vic) excludes certain subject matter from the referral (such as occupational health and safety, workers’ compensation, and anti-discrimination). The referral generally excludes only senior executives in the public sector, ministerial and parliamentary officers and the judicial and tribunal members from coverage under the Commonwealth regime.

The Queensland government has also reached an “in principle” agreement to refer its powers, although this commitment was more qualified, and is “subject to a number of key issues being resolved”.

The remaining States appear to be more reluctant to refer their powers. New South Wales is still involved in negotiations with the Commonwealth, but declared that it would not determine its position until after the remaining Fair Work legislation is enacted. Its concerns include the future of New South Wales Industrial Relations Commission members, support for small business and pressure from unions to retain State legislation that may provide greater employee protection. Western Australia is currently conducting a review of its workplace laws and is considered to be unlikely to refer its powers; however, the Government has stated that it will consider “opportunities for harmonisation”.

Both the Australian Capital Territory and the Northern Territory agree in principle with a consistent national approach to workplace relations, although they are already subject to the Commonwealth regime.

The Commonwealth has enacted the Fair Work (State Referral and Consequential and Other Amendments) Act 2009 (Cth) to provide a framework to receive the referrals from the States.

Who does this affect?
All Australian employers

What do you need to do?
Review how the issues and developments covered in our publication impact your business. Consider if your internal processes need to be revised. We can help.




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