Full implementation of the Fair Work Act 2009, an improving economy and an election which will inevitably bring further changes to employment laws, are going to make 2010 a mammoth year for IR lawyers. Many in the industry say that businesses have no idea what is about to hit them.
The Fair Work Act has brought large clients calling on law firms as they try to understand how changes to the regulations will impact their business. The first changes occurred in July last year with initial amendments coming into play. However, introduction of the National Employment Standards (NES) and changes that occurred in January will provide an avalanche of work for employment lawyers.
“I think it’s going to be a huge year for a number of reasons,” says Harmers Workplace Lawyers managing partner, Joydeep Hor. “Those businesses that have not come close to coming to grips with the ramifications of the new laws will need a lot of help. Individuals will have a lot more rights in the context of termination of employment. All of those things point to a very, very big year.”
Minter Ellison IR partner Gareth Jolly agrees, saying that a number of developments in 2010 will result in an increased workload for employment lawyers. “I think that you’ll see the development of different types of employee actions such as adverse action proceedings this year,” he says. “This is where an employee asserts that an employer has taken adverse action against them for a prohibited reason.”
Jolly says that “those types of actions have been around for a while but the Fair Work Act has consolidated those provisions and to some degree extended them. As a consequence you’re likely to see increasing use of them.”
Campbell Fisher of FCB Lawyers is currently recruiting four lawyers to deal with an anticipated surge in demand for employment work. He says the new Act brought into operation a range of new modern awards, quite a significant change. “I think many people in business will not yet appreciate the degree of change that will come through that modern awards system,” Fisher says.
“The majority of private industry will have to adjust to those new sets of minimum conditions. Employment lawyers will be very busy helping business understand what that means, realise opportunities and ensure they move to comply.”
Just award
The changes to workplace law include modernisation of awards, which will have a greater impact on some businesses.
Tim Capelin of Australian Business Lawyers says the expansion of award coverage is going to take clients working in the financial services sector by surprise. “A lot of participants in the finance sector are probably only used to engaging with the clerical award which covers a small percentage of their workforce,” Capelin says. “They’ll suddenly find a much larger percentage of their workforce will be covered, which will create some compliance issues for them. But it will also give unfair dismissal rights to people who previously didn’t have them.
This change will lead to a substantial increase in legal work explaining new award coverage across industries. The only thing that is certain for people is their current award won’t be their new award – and will vary from employer to employer.
Work flowing from the Act really started to ramp up in the last quarter of 2009. Lawyers working in the field say they expect increasing interest throughout the first half of 2010, with most of the pay elements for most industrial awards not coming into effect until July.
Into the bargain
Enterprise bargaining has also caused headaches. Capelin says that the financial crisis led many businesses to suspend enterprise bargaining, or enter into one-year agreements on wage increases which are set to expire this year. Those who refrained from negotiating in the height of the economic downturn will have returned to the negotiating table at the end of last year.
Capelin expects work in this area to continue to increase throughout this year. “The difficulty that employers are facing is that there’s a perception amongst some in the union movement that the GFC is over and that businesses are doing as well as the share market suggests they’re doing,” he says. “You’ve got this massive growth in share prices over 2009 and unions are very nervous that employers are doing much better than they actually are.”
Capelin says that disconnection between unions and employee expectations and what employers can provide will lead to problems in enterprise bargaining, resulting in both sides seeking legal advice and representation. And lawyers are seeing an increase in work related to disputes around enterprise bargaining. A short negotiation lasts about three months but these complications mean that some bargaining talks will last much longer than that, providing on-going work for law firms.
Economic rebound
Harmers Workplace Lawyers won the award for ALB ‘Employment Law Firm of the Year’ in 2009, and Harmers’ Hor expects the recovering economy to play a role. “With the general economy picking up we’ll see more activity in the M&A space which will also be positive for work levels,” she says. There’s always issues of dealing with employee entitlements when they’re transferring from one business to another as well as a whole range of other things – contracts, redundancies where necessary, selection criteria.”
M&A is not the only field where employment lawyers will be kept busy by improving economic conditions. FCB’s Fisher says that in the last six months his firm has had as much work as it could handle – he has had to increase staffing levels to be able to cope with the increased volume of work. “I think we’re starting to see the economy strengthen and there’ll be a range of opportunities from people looking to build back in the capability that business has shed through the financial crisis.”
“That will lead to a range of labour hire and outsourcing opportunities as people start to build organisational competency,” Fisher says, adding that business is likely to start building that organisational competency in outsource models before moving to direct hire models. Employment lawyers are in the enviable position of being able to find a decent amount of work at any point in the economic cycle – it’s just the nature of the work that changes.
During the recent downturn employment lawyers found themselves working on restructuring and redundancy issues as businesses sought to reduce their labour costs, as well as numerous litigation cases associated with staff losing payemployment. When more buoyant economic times arrive the workload changes towards helping businesses realise growth opportunities.
“You tend to look at innovative ways to employ and engage people and maximise the contribution they make to business success,” Fisher says. “Large businesses in particular tend to spend a great deal of time and effort to ensure they do things properly, so you do a lot of work just making sure large business understands the law.”
Election promise
Prime Minister Kevin Rudd has said he will not use the failed carbon pollution reduction scheme legislation as a trigger to call for a double dissolution. Even if he does stays true to his word, there will be a federal election before the end of 2010. And the promise of an election means that IR laws will again feature prominently on the political agenda, with further changes inevitable.
“Regardless of what happens in the next election I think we will see further changes to this legislation, with [Opposition Leader] Tony Abbott indicating a move away from this current legislation in a fairly significant way,” Hor says. “That would mean the whole issue of IR will continue to be visible in the lead-up to the next election.”
If the Coalition won, the new Prime Minister would seek to pare back some of the union-friendly provisions that the Rudd Government has put in place. Some of the employer-friendly provisions, such as the ability to have individual work contracts, could well come back.
However, if Labor wins there is the opportunity to push IR legislation further left. “If the Labor Government is re-elected, I think we could well see this legislation moving in the direction that it’s already heading – perhaps some greater rights and powers for the union movement would be the area of most change,” Hor says. “It’s just always a changing area, it’s never static, and even if governments are re-elected IR legislation never stays still.”
Already anticipating an increase in demand, many law firms spent the end of 2009 boosting their employment teams. Top partners were snared to continue to pay dividends for their new firms from their experience and client relationships. Deacons, Hall & Wilcox, Lander & Rogers and Thomson Playford Cutlers have all recently announced partner hires to their employment law teams.
It is hoped that the legal experts’ knowledge of the practice will help clients navigate the powerful rapids of new legislation while taking advantage of new opportunities, and come to grips with a potential new party in government. All the ingredients are in place for 2010 to be a busy one for IR practices. Any way you look at it, there is a lot of work coming their way this year.
Related stories: