REGULATORY IMPACT STATEMENT
TITLE OF REGULATORY PROPOSAL:
Industrial Relations (General) Regulation 2015
PROPONENT:
NSW Industrial Relations
NSW Treasury
RESPONSIBLE MINISTER:
Gladys Berejiklian
Treasurer
Minister for Industrial Relations
RELEVANT ACT:
Industrial Relations Act 1996
1
CONTENTS
1.
WHY IS THE REGULATORY IMPACT STATEMENT REQUIRED? ................................ 3
2.
APPROACH TAKEN IN THIS REGULATORY IMPACT STATEMENT ........................... 4
3.
NSW REGULATORY CONTEXT – INDUSTRIAL RELATIONS ACT 1996 ..................... 4
4.
CONSULTATION.................................................................................................................... 6
5.
THE CURRENT INDUSTRIAL RELATIONS (GENERAL) REGULATION 2001 ............. 7
6.
CHANGES MADE TO THE CURRENT REGULATION SINCE 2001 ............................... 7
7.
CHANGES MADE BY THE PROPOSED REGULATION .................................................. 8
8.
REGULATORY OPTIONS ................................................................................................... 10
2
1. WHY IS THE REGULATORY IMPACT STATEMENT REQUIRED?
Before a principal statutory rule such as the proposed Industrial Relations (General)
Regulation 2015 (the proposed Regulation) is made, the responsible Minister is required
under s5 (1) of the Subordinate Legislation Act 1989 (SL Act) to ensure that, as far as is
reasonably practicable, a regulatory impact statement (RIS) is prepared.
The RIS is required under the SL Act to address the following:

identify the objectives sought to be achieved through a proposed Regulation and the
reasons supporting those objectives

identify alternative options to achieving those objectives

assess costs and benefits of the proposed Regulation and alternative options

determine which course of government action involves the greatest benefit or least
net cost to the community (section 5 and schedule 2 SL Act).
The RIS has been prepared for the proposed Regulation (attached) which is to be made
under the Industrial Relations Act 1996 (IR Act) for the purpose of giving effect to certain of
its provisions. The Regulation remakes (with certain amendments) and replaces the existing
2001 Regulation which will be repealed on 1 September 2015 under s10 (2) of the SL Act.
The provisions of the proposed Regulation are made pursuant to various provisions of the IR
Act including s83 (2) (unfair dismissal exemptions), s208 (4) (functions of Industrial
Registrar) and ss249, 282 and 291 (provisions dealing with the regulation of State industrial
organisations).
There is also a general regulation making power under s407 of the IR Act. This provision
permits regulations to be made not inconsistent with the IR Act with respect to any matter
that is required or permitted to be prescribed under the Act (or that is necessary or
convenient to be prescribed for carrying out or giving effect to the Act).
Submissions about the proposed Industrial Relations (General) Regulation 2015 can be
made to:
Executive Director
NSW Industrial Relations
GPO Box 5469
Sydney NSW 2001
or by email to: [email protected]
3
2. APPROACH TAKEN IN THIS REGULATORY IMPACT STATEMENT
The RIS provides a brief overview of the Industrial Relations (General) Regulation 2001 (the
existing Regulation) and a brief outline of the objects and key provisions of the IR Act.
The objectives of the proposed Regulation are canvassed and the alternative options for
achieving the stated objectives considered. This is followed by an assessment of the
proposed Regulation and a consideration of the relative merits of the alternative options in
terms of costs and benefits involved. Consultations relating to the development of the RIS
and the program for future consultation with stakeholders and other members of the
community are outlined in the RIS.
Making the proposed Regulation (Option 1) with the amendments described is the preferred
regulatory option. Alternative options to be considered for achieving the objectives of the
Regulation are as follows:

Option 2 - remaking the 2001 Regulation without changes

Option 3 - not proceeding with a new Regulation (No regulation)

Option 4 - dealing with the matters in the proposed Regulation exclusively by way of
formal amendments to the IR Act.
The costs and benefits associated with the making of the proposed Regulation and the
alternative options are discussed below at Section 8.
3. NSW REGULATORY CONTEXT – INDUSTRIAL RELATIONS ACT 1996
The IR Act provides the principal framework for the regulation of the NSW industrial relations
system.
The IR Act provides for the regulation of industrial matters including the following:

Providing a framework for industrial parties to make awards and agreements with the
assistance of the Industrial Relations Commission (IRC)

Conciliation and arbitration of industrial disputes by the IRC with powers to make
dispute orders resolving the relevant dispute

Unfair dismissal remedies for certain employees and the rights of public sector
employees to appeal against the appealable decisions of their employer

Entitlement to unpaid leave for victims of violent crime

Protection of employment conditions of outworkers in the clothing trades

The membership, organisation and appeals processes of the IRC
4

Provisions securing freedom of association rights in relation to membership of
industrial organisations, including anti-victimisation protections

Registration of State industrial organisations covering matters such as the conduct of
elections, duties and liabilities of officers and audit/accounting requirements

Remedial powers of the IRC to declare industrial organisations dysfunctional, appoint
an administrator and/or approve a scheme to reconstitute an organisation or branch if
such declaration is made

Jurisdiction of the IRC in relation to contracts of carriage or bailment (taxis) regulating
carriers/drivers and their principal contractors in order to secure employment-like
conditions through contract determinations/agreements

Penalty and enforcement provisions that facilitate general compliance with the IR Act,
the functions of industrial inspectors, the recovery of unpaid remuneration and the
authority of persons prescribed under the Regulation to prosecute offences under the
IR Act.
Changes to the NSW jurisdiction
It is important to note the significantly reduced scope and coverage of the industrial relations
jurisdiction in NSW since the current Regulation was made in 2001. This is a highly relevant
contextual consideration for any assessment of the matters that are required to be dealt with
in the RIS, including the overall regulatory impact of the proposed Regulation.
The NSW industrial relations framework essentially no longer regulates employers and
employees in the private sector. Rather, it makes provision for industrial relations matters
pertaining to the public sector and local government sector and eligible employers under
s14(2) of Fair Work Act 2009 declared to be non-national system employers under s 9A of
the IR Act by the NSW Minister for Industrial Relations and endorsed as such by the
relevant Commonwealth Minister.
The reduced scope of the jurisdiction is a consequence of developments in the federal
industrial relations system since 2006. In March 2006, as a result of the commencement of
the Work Choices amendments to the then Workplace Relations Act 1996 (Cth) an
estimated 2.2 million NSW employees employed by approximately 300,000 incorporated
employers were transferred from the NSW industrial relations jurisdiction to the federal
industrial relations system.1
This was followed, in 2010, by a series of referrals to the Commonwealth Parliament of the
industrial relations legislative powers of State parliaments, including NSW,2 in relation to the
regulation of unincorporated employers. As a result of the NSW referral and its legislative
acceptance by the Commonwealth Parliament3 an estimated additional 550,000 employees
1
ABS, Cat No. 6306.0: Employees, Earnings and Hours, May 2006 and Australian Taxation Office 2005 – Unpublished data:
Australian Business Register
2
Industrial Relations (Commonwealth Powers) Act 2009, commenced 1 January 2010
3
Fair Work (State Referral and Consequential and Other Amendments) Act 2009 (Cth)
5
employed by approximately 200,000 unincorporated employers in NSW were transferred into
the federal system at that time.4
Since 2006, this represents in total the removal of some 2.75 million private sector
employees from the NSW jurisdiction and the scope of the IR Act.
Presently, it is estimated there are approximately 290,000 FTE public sector employees and
56,000 employees in the local government sector that have remained in the state industrial
relations system.5
As previously noted the reduced scope and coverage of the NSW industrial relations
jurisdiction is a relevant factor in assessing the potential regulatory impact of the proposed
Regulation - particularly in relation to employers and employees in the private sector.
The broad conclusion of such an assessment is that, when compared to the existing
Regulation as it applied prior to 2006, the proposed Regulation will have negligible direct
cost impacts on private sector employers operating in NSW since they have practically all
been transitioned into the federal system.
4. CONSULTATION
NSW IR has met and held discussions with officers from the Industrial Registry to consult
about a range of matters, including matters relating to the effective operation of the IRC and
the functions of the Industrial Registrar, as well as Chapter 6 requirements relating to
contract carriers and drivers.
Internal discussions within NSW IR have drawn on the knowledge of the Public Sector
Industrial Relations Branch regarding the exemptions from unfair dismissals provisions and
its practical application in the NSW public sector, whilst the Compliance Branch were
consulted about provisions relating to the issuance of pay slips to employees and the
keeping of time and wages records by employers.
Proposed public consultation
Public consultation is an important aspect of the development of regulatory proposals.
Section 5 of the SL Act requires that consultation is to take place with appropriate
representatives of consumers, the public, relevant interest groups, and any sector of industry
or commerce, likely to be affected by the proposed statutory rule or regulation.
A notice under s5 (2) (a) of the SL Act was published in the Sydney Morning Herald and
Daily Telegraph and the Government Gazette 10 June 2015. The RIS and the draft
Regulation has also been uploaded on to the NSW Industrial Relations website at
http://www.industrialrelations.nsw.gov.au with an invitation to provide comments.
All the comments and submissions received as the result of this process will be given
appropriate consideration. The time frame for making submissions regarding this proposal is
not less than 21 days. Submissions must be received no later than 1 July 2015.
4
ABS, Cat No. 6306.0: Employees, Earnings and Hours, August 2008 and Australian Taxation Office 2005 – Unpublished data:
Australian Business Register
5
Public Service Commission Workforce Profile Report 2014 and ABS Cat No. 6248.0.55.002 Employment and Earnings, Public
Sector, Australia, 2013-14
6
5. THE CURRENT INDUSTRIAL RELATIONS (GENERAL) REGULATION 2001
The 2001 Regulation contains a number of provisions that support in part the operation of
the IR Act. Among other matters, the existing Regulation provides for the following:

prescribing various functions of the Industrial Registrar which include notifying
affected persons in relation to a proposed enterprise agreement and measures
designed to streamline proceedings before the Registrar and protect their integrity

specifying the classes of employees exempt from the unfair dismissal provisions and
the remuneration threshold for exemption

the particulars of pay slips and record keeping requirements for employers

nomination rights governing employer and employee representation on Industrial
Committees

various matters concerning the administration and organisation of the IRC, including
payment of fees in respect of the conduct of its business

matters relating to the jurisdiction conferred on the IRC by Chapter 6 of the IR Act
including the registration and recognition of associations of contract carriers/drivers

prescribing particular industrial organisations as persons with authority to prosecute
offences under the IR Act and Regulation

the governance of State registered industrial organisations, including the conduct of
the election of officers.
6. CHANGES MADE TO THE CURRENT REGULATION SINCE 2001
The following amendments have been made to the Regulation since 2001. These do not
include those relating to annual increases for fees charged by the IRC and a number of
consequential technical amendments:

2006 - updating clause 5 references dealing with exemptions of classes of
employees from unfair dismissal provisions to equivalent provisions in the Workplace
Relations Regulations 2006

2006 - increasing from $10,000 to $20,000 the maximum amount that the IRC or an
Industrial Magistrate may order an employer to pay in relation to small claims
applications under s379 of the IR Act

2010 - to make transitional provisions that preserve certain leave, superannuation
and other entitlements of certain former Chairpersons of the Government and
Related Employees Appeal Tribunal

2013 - to prescribe the Emergency Medical Service Protection Association (NSW) as
a body that is capable of registration as a State organisation of employees
7

2014 - to provide for the most senior judicial member of the IRC to be the Acting
President in certain circumstances.
7. CHANGES MADE BY THE PROPOSED REGULATION
The amendments to the existing Regulation which are contained in the proposed Regulation
are:

Clause 5 – unfair dismissals - updating reference to repealed legislation (in Part 3 of
the Regulation)

Clause 9 – contents of records (general) - updating reference to repealed legislation
(Part 4)

Clause 12 – contents of records (superannuation contributions) - inserting certain
definitions from a Commonwealth transitional regulation as current reference has
been repealed (Part 4)

Clause 29A – excision of clause relating to the Emergency Medical Service
Protection Association (NSW) (Part 6)

Clause 30 – excision of clause relating to the status of non-industrial organisations
under the repealed Industrial Relations Act 1991 as it is not necessary due to the
application of the Interpretation Act 1987 (Part 6)

Clause 43A – subcontractor’s statement about payment of employees – excision of
clause due to overriding Commonwealth legislation (Part 10).
Clause 5 – Exemptions from unfair dismissals
The proposed change is of a machinery nature to remove and replace a reference to a
repealed Commonwealth Regulation. The amendment would give effect to the current
Commonwealth Regulation that determines the maximum annual remuneration of
employees not set by an industrial instrument and helps clarify the intended scope and
purpose of the statutory unfair dismissal protections. These protections essentially cover
non-managerial employees other than short-term casuals and those engaged for a fixed
period.
Clause 9 – Contents of employer records
The proposed change is also of a machinery nature to remove and replace a reference to
repealed State legislation to enable the provisions to validly apply. The clause relates to the
content of an employer’s time and wages records and would refer to the definition of an
employee who is an apprentice or trainee within the meaning of the Apprenticeship and
Traineeship Act 2001. The current reference is to the Industrial and Commercial Training Act
1989 (now repealed).
8
Clause 12 – Contents of employer records – superannuation contributions
This clause prescribes particulars about any superannuation contributions that the employer
must make for the benefit of the employee under an industrial instrument. These include the
amount of the contributions made, the period, the applicable fund and the basis of the
employer’s liability to make the contribution.
Currently the clause refers to a Regulation that has subsequently been repealed for the
definition of a ‘defined benefit superannuation fund’. To allow the provision to validly operate
it is proposed to extract the relevant definitions from a Commonwealth transitional regulation.
Clause 29A – Emergency Medical Service Protection Association (NSW)
This clause ensured the Emergency Medical Service Protection Association (NSW)
(EMSPA) was capable of registration as a State organisation of employees as a
consequence of the passage of the Industrial Relations Amendment (Industrial
Representation) Bill 2012. The Bill, which amended the IR Act, provided certain employees
with greater choice when deciding on their union membership.
Following the passage of the amended Bill, EMSPA successfully applied before the IRC, for
registration as a State organisation of employees and therefore the regulation is no longer
required.6
Clause 30 – Former non-industrial organisations
This clause preserved the continuity of former non-industrial organisations which were
incorporated under the Industrial Relations Act 1991 upon its repeal. This provision is
proposed to be excised as it is unnecessary given that s30 (2) (d) of the Interpretation Act
1987 read with clause 30 (1) of the existing Regulation provides that the operation of a
transitional provision of this kind is not affected by the repeal of a statutory rule such as the
2001 Regulation.
Furthermore, the Industrial Registry has advised that there are no such organisations
registered in the NSW industrial system.
Clause 43A – Subcontractor’s statement about payment of employees
It is proposed that clause 43A, which is authorised by s127 of the IR Act, be deleted. Section
127 is a regulatory mechanism for fixing responsibility for the payment of remuneration up
the chain of contracting. A principal contractor is liable for the remuneration of a
subcontractor’s employees unless a statement has been received by the principal from the
subcontractor that the relevant remuneration has been paid.
The Regulation provides that, without limiting the form in which the statement may be given,
the relevant statement may be in a form approved by the Director-General of the Department
of Commerce (now Secretary of Treasury). There is no current approved form.
6
The Industrial Relations (General) Amendment (Registration) Regulation 2013 was made in February 2013. In June that year,
Haylen J of the IRC issued a decision noting that having been satisfied that EMSPA had met all the statutory requirements for
registration determined EMSPA be registered as a State organisation of employees under the IR Act.
9
Section 127 of the IR Act is largely inoperative because of the operation of the IC Act when
read with s109 of the Commonwealth Constitution. The latter provision renders state laws
inoperative to the extent of any inconsistency with a law of the Commonwealth.
Section 7(1) (b) of the IC Act excludes a State law from applying to a party to a services
contract which imposes obligations or liabilities (or confers rights and entitlements) on such
persons in a matter that would be, in an employment context, a workplace relations matter.
Section 127 of the IR Act is a State law of this kind and is therefore an excluded law as it
imposes responsibility or an obligation upon principal contractors in respect of the unpaid
remuneration of the employees of their contractors. For the IC Act provision to apply in
relation to the State law one of the relevant contracting parties must be a trading corporation,
which is likely to be the case in most instances.
As clause 43A only operates in so far as s127 is operable, there is no longer any need for
this clause.
8. REGULATORY OPTIONS
Four Options are considered by this RIS for achieving the statutory objectives set out in the
IR Act.
Option 1 is the recommended (preferred) option as it provides a greater net benefit for the
community when compared to the other options.
Option 1 (Preferred)
The proposed Regulation is made with the following principles in mind:

to provide, in part, machinery and other provisions supporting the operation of the IR
Act but imposing only the degree of regulation required to achieve the stated
regulatory objectives in line with better regulation principles and practice

meeting the specific regulatory needs of the users of the NSW industrial relations
system while taking into account the greatly reduced scope and coverage of the IR
Act and Regulation.
10
The following table provides a summary of the costs and benefits of the proposed
Regulation.
Costs and benefits of proposed 2015 Regulation
Proposed provisions
Part 2 – Enterprise
agreements
The Act requires the
Industrial Registrar to notify
persons or bodies as
prescribed of a proposed
enterprise agreement; the
regulation prescribes who
must be notified.
Part 3 – Unfair dismissals
Exemptions of specified
classes of employees from
unfair dismissal provisions
and the setting of a
remuneration limit for
accessing the unfair
dismissal remedy.
Part 4 – Pay slips and
employers’ records
Requirements relating to
particulars of payslips such
as all deductions, any
overtime and the gross and
net amount of remuneration.
The required content of
employers’ time and wages
Costs
Administrative costs are
borne by the IRC in relation
to notifying persons of a
proposed enterprise
agreement.
Since the Work Choices
amendments in 2006
transferred corporate entities
into the federal system there
has been a steep decline in
the use of enterprise
agreements in the state
system.7
There are no additional
administrative costs as the
clause will not be amended.
Administrative costs involved
for the IRC in terms of
screening unfair dismissal
claims to determine exempt
employees.
However, the exemptions
help streamline the process
and may reduce overall
transaction costs incurred by
employers and other
participants in the
jurisdiction.
There are, however, no
additional costs involved as
the requirements are
unchanged.
There are compliance costs
for employers but the vast
majority of them are in the
local government and public
sectors.
There has only been one
substantive change to the
requirements since 1996
(inclusion of ABN of
Benefits
Supports and expedites the
enterprise agreement
bargaining process and the
ability of employers and
employees to make industrial
arrangements which suit
their interests.
Ensures unfair dismissal
remedial measures can be
used only by those
employees who are intended
to be within the scope of the
provision and its protections.
Defines the ambit of the
unfair dismissal provisions to
enable proper and orderly
administration of the unfair
dismissal laws by the IRC.
The exemptions are broadly
consistent with those
outlined in the federal
jurisdiction.
Setting out the manner and
form requirements for the
keeping of employer records,
including leave details, and
specifying payslip particulars
assists in the management of
compliance with industrial
relations laws.
It also provides employers
7
Industrial Relations Commission Annual Reports – 2005-2013 indicate 359 enterprise agreements were made in 2005
compared with 8 in 2013 – this represents a 98% decrease
11
Proposed provisions
records is also specified –
which includes the period of
employment and terms of
engagement.
Costs
employer) and the
obligations are therefore well
known to participants in the
system.
An employer must also
maintain leave records which
include matters such as
leave taken, the entitlement
from time to time and accrual
of leave.
There are no additional costs
involved as the requirements
are unchanged.
Benefits
with certainty in relation to
their standard recordkeeping obligations for the
purposes of ensuring the
effective and equitable
enforcement of the IR Act
and Regulation.
Employees are also provided
with the type of prescribed
information which enables
them to determine their
correct leave entitlements
and remuneration.
This also supports the civil
penalty recovery processes
under the IR Act and assists
in the enforcement of the
Long Service Leave Act
1955.
Obligations on former
employer to transfer
employment records to a
successor employer (who
must maintain the records for
a prescribed period) where
there is a transfer of
business under the IR Act.
It also helps protect and
clarify employee entitlements
where there is a transfer of
business regulated under the
IR Act.
Part 5 Industrial Relations
Commission
Provisions dealing with the
organisation and conduct of
the business of the Industrial
Relations Commission and
the functions of the Industrial
Registrar.
Administrative costs for the
IRC and the Industrial
Registrar are involved but
there are no additional costs
imposed by the proposed
Regulation as the
requirements are
unchanged.
Supports a more effective
compliance regime which in
turn assists in a reduction of
the numbers of industrial
complaints made to NSW IR
thereby leading to a more
optimal use of resources in
proactive compliance
campaigns.
Provisions assist in ensuring
the efficient and effective
conduct of the business of
the IRC.
Specific recognition given to
the Hunter and Illawarra
areas as regional locations
for the IRC can assist in the
expeditious settlement of
local disputes through local
knowledge and experience.8
The payment of reasonable
8
Industrial Relations Commission Annual Report – 2013 notes there were a total of 233 sitting days in Newcastle and
Wollongong
12
Proposed provisions
Costs
Part 5A – Commission fees
Provisions dealing with fees
in relation to proceedings of
the IRC including sittings as
the Industrial Court.
Transaction costs are
involved for users of the
processes of the IRC.
Part 6 – Industrial
organisations
Provisions dealing with rules
for elections and other
matters relating to industrial
organisations.
Elections of officers
Clause 31 provides that the
provisions of ss 442-451of
the IR Act 1991(and the
regulations under those
provisions) apply.
Elections for office are
compulsory and the cost of
election to be borne by the
organisation.
Application to be made to the
Industrial Registrar for the
authorisation of an election
and to arrange for a person
to be appointed to conduct
an election.
9
Fees are reviewed annually
and in recent years have
been increased in line with
the NSW Public Sector
Wages Policy index (2.5%).
It is intended to commence
administrative arrangements
to review the scale of fees. If
an increase to fees is
approved, it is likely the new
fee structure will be included
in the proposed new
Regulation.
There are 86 registered
organisations in the NSW
system. Of these 45 are
unions, while 41 are
employer organisations.
Currently it is estimated there
are 566,000 trade union
members in NSW, although
not all of this number would
be members of organisations
registered under the IR Act.9
There are compliance costs
for industrial organisations in
relation to the election
requirements and approval
processes. The ability to
manage the costs will
depend on the relative size
and assets of the
organisation affected.
There are also administrative
costs incurred by the
Industrial Registrar in
carrying out relevant
inquiries, or if the IRC has
cause to conduct an inquiry
Benefits
expenses to persons
required to attend before the
IRC is equitable and in line
with current practice of other
courts.
Income derived from fees
charged helps maintain the
efficient and effective
administration of IRC tribunal
processes and the way the
IRC conducts its business.
The Industrial Registrar has
a statutory discretion to
waive or postpone fees in
circumstances of hardship
which builds equity into the
fee administration process.
The provisions support the
regulation of industrial
organisations under the IR
Act.
They protect the interests of
members of such
organisations and the
broader public interest by
ensuring the proper
governance and
transparency in the conduct
of the affairs of such
organisations.
Given the recent examples of
financial misconduct within
registered organisations it is
particularly important that
their management is
accountable and
contributions of members are
being used for proper
purposes.
ABS Cat No. 6310.0: Employee Earnings, Benefits and Trade Union Membership, Australia, August 2013
13
Proposed provisions
Part 7 – Public vehicles
and carriers
Regulation in relation to
public vehicles and carriers
and providing for the
registration and recognition
of associations of contract
carriers and drivers.
Part 8 – Enforcement
Facilitating and supporting
the enforcement of the IR Act
including the prescribing of
penalty notice offences.
Costs
into alleged electoral
regularities.
There are no additional costs
involved as there are no new
obligations imposed.
Compliance costs are
involved for associations
which wish to be registered
under the IR Act or
alternatively have their
registration withdrawn.
There are also administrative
costs involved in the
Industrial Registrar carrying
out the obligation to notify
persons in relation to a
proposed contract
agreement involving a group
of carriers.
There is, however, no
increase in current regulatory
costs as requirements are
unchanged.
There are some
administrative costs incurred
by NSW IR relating to the
issuance of penalty notices.
However, since the NSW
Since the referral of industrial jurisdiction was further
relations powers to the
reduced in 2010 the numbers
Commonwealth in 2010 and
of penalty notices issued to
the expiration of the contract employers has dramatically
with the Commonwealth in
reduced.10
June 2013 to investigate
complaints in the national
There is no additional
system, the majority of
regulatory impact on persons
compliance operations have
through the imposition of
focussed on long service
increased penalties or
leave and taxi industry
additional obligations.
matters.
Benefits
These provisions support the
processes of the Chapter 6
jurisdiction of the IRC.
They enable contract
carriers/drivers to have their
working conditions
determined through
bargaining arrangements
(contract agreements) and
contract determinations
conferring employment type
benefits.
These provisions contribute
to an effective, flexible and
efficient compliance
management system and to
the effective enforcement of
the IR Act.
Penalty notices can be used
in compliance targeting
campaigns, particularly in
cases where the severity of
the detected offence is of a
minor nature.
The use of penalty notices in
appropriate circumstances is
an alternative sanction to
often costly prosecution
action.
Also an industrial
organisation concerned in
the relevant industry is
prescribed as a person
authorised to prosecute
offences under the IR Act
10
Since July 2013 there have been 6 penalty notices issued to employers for breaches of the IR Act.
14
Proposed provisions
and Regulation. An industrial
organisation that initiates
proceedings for an offence
must inform the Secretary
within three days of doing so.
Part 9 – Additional persons
deemed to be employees
Additional persons can be
prescribed by regulation as
employees under the IR Act.
Specifically, a security
industry worker is deemed to
be an employee regardless
of their common law
classification.
Costs
Benefits
If the clause has practical
application in the NSW
jurisdiction there would be
costs to the person engaging
the contractor in complying
with the Security Industry
(State) Award.
Should the clause have any
practical coverage,
protections are afforded by
conferring deemed
employment status upon the
individual and the terms and
conditions of the Security
Industry (State) Award.
There would be a minor
administrative/labour cost to
Government associated with
removing the Regulation.
There would be efficiency
savings as the administration
of the Regulation is
streamlined to remove a
provision which no longer
has any valid operation.
Commonwealth laws mean
the application of this clause
is likely to have minimal, if
any coverage in the NSW
jurisdiction. However, to be
abundantly cautious, the
clause will be retained.
Part 10 – Miscellaneous
The provision regarding a
subcontractor’s statement
about payment of employees
to be removed.
Costs
The regulatory impact of costs associated with the proposed Regulation should be assessed
in part by taking into account the important consideration that costs imposed on private
sector employers by the proposed Regulation will be almost negligible when compared with
the position prior to 2006. This is for the reasons stated earlier in the RIS that almost all
incorporated and non-corporate employers previously operating in the State jurisdiction are
now covered by the national industrial relations system.
In assessing compliance costs generally it should be noted that usually the differential
regulatory impact of the relevant requirements must be acknowledged and that this will
depend on the size of the affected employer’s enterprise/organisation and the dedicated
human resources available to meet the regulatory requirement involved. Larger enterprises
may be better able to absorb the compliance costs imposed by the proposed Regulation.
However, this is not generally the case with the proposed Regulation (outside the area of
regulation of industrial organisations), as the requirements will fall mainly on public sector
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employing agencies and employing entities in the local government sector which will have
the capacity and dedicated administrative resources to meet the compliance costs.
Generally, the costs involved will not significantly increase under the proposed Regulation.
The main changes to the existing Regulation do not involve additional obligations but the
removal of spent provisions and those with little valid operation for practical purposes as well
as the updating of references to Commonwealth and State legislation.
As the above Table shows, there are clearly some compliance costs associated with
meeting the requirements of the proposed Regulation and administrative costs incurred by
the IRC (including the Industrial Registrar) in carrying out prescribed functions. There are
also transaction costs incurred by users and participants in the NSW industrial relations
jurisdiction in accessing the services and tribunal processes offered by the IRC. However,
any cost impacts are marginal, largely predictable and should be seen in the light of the
benefits that accrue to the community.
Benefits
Any costs arising from obligations imposed by the proposed Regulation are significantly
outweighed by the benefits it provides to the community. These include savings derived from
the removal of spent or largely inoperative provisions which will achieve efficiencies gained
from streamlining the administration of the IR Act by excising regulatory requirements with
no practical utility or contemporary application.
The proposed Regulation in broad terms also helps ensure that the NSW industrial relations
system is in line with contemporary community expectations and harmonises with federal
requirements where relevant to provide consistency with the requirements and practice of
the national workplace relations system.
The making of the proposed Regulation also provides general support for the regulatory
objectives of section 3 of the IR Act and contributes in particular to the achievement of the
following statutory objects:

an industrial relations framework that is fair and just (s3(a))

to promote efficiency and productivity in the economy of the State (s3(b))

encouraging responsible management and democratic control of organisations and
employees (s3(d)) particularly through regulation of industrial organisations and their
electoral processes

to facilitate appropriate regulation of employment through awards, enterprise
agreements and other industrial instruments (s3(e))

encouraging innovative, equitable and productive workplace relations (particularly in
relation to the Chapter 6 jurisdiction (s3(h))
Supporting government action which promotes the furtherance of these regulatory goals is of
significant benefit to the community. In more specific terms the proposed Regulation
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prescribes the functions of the Industrial Registrar which supports the effective
administration of the IRC and its remedial tribunal processes.
The proposed Regulation also prescribes record keeping requirements for employers that
promote compliance with IR Act requirements and provides, through the prescription of
penalty notice offences, a flexible enforcement and compliance framework as an alternative
to often costly court proceedings.
The provisions for the conduct of elections of officers of industrial organisations are to the
benefit of the members of such organisations and the broader community as they contribute
to proper governance and help prevent abuses and organisational dysfunction of the kind
that has been publicly reported in recent times.
As discussed earlier a number of the provisions are of a machinery nature with no additional
cost impacts to those flowing from the existing Regulation. They clarify the intent and
operation of the related provisions in the IR Act which contributes to the efficient and
effective administration of the NSW industrial relations system.
Option 2 - remaking the regulation with no changes
Costs
There would be costs incurred in terms of loss of community protection and
efficiencies/savings if the current Regulation is remade without amendment. There is also a
cost in retaining provisions which have no utility. It is in the public interest to update
regulation by removing and updating statutory references to give provisions practical and
legal operation.
Benefits
Any benefits such as savings in administrative costs of making the Regulation would be
minor and significantly outweighed by the benefits discussed above.
Option 3 – No Regulation
Costs
Proceeding with this option would mean that no Regulation would be made under the IR Act
and the current 2001 Regulation would lapse. The cost of this option is that the machinery to
implement important provisions of the IR Act would not be in place and the regulatory
purpose of the IR Act not fully realised.
This in turn, would have the potential to frustrate the intention of Parliament and bring the
NSW legislative process into public disrepute.
Benefits
Any benefits such as savings in the administrative costs of making the Regulation would be
significantly outweighed by the costs associated with having no regulation to ensure
important provisions of the IR Act operate effectively.
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Option 4 - proceeding only by amendments to the IR Act
Costs
Addressing regulatory matters through the IR Act rather than in the Regulation would result
in additional costs being incurred when future amendments are required. These include the
use of Parliamentary sitting time and the significantly higher administrative costs associated
with amending the Act compared with amending a Regulation, as well as the loss of flexibility
to address emerging issues in a timely manner.
Benefits
There may be a small reduction in the amount of subordinate legislation, and opportunities
for more comprehensive Parliamentary scrutiny of the provisions as part of the IR Act.
However, the Legislation Review Committee examines and reports on subordinate
legislation. An additional layer of scrutiny is provided by Parliament itself which has the
ability to pass a resolution disallowing a Regulation that has been made.
Conclusion
After considering the relative merits of the above regulatory Options it is recommended that
Option 1 be adopted and that the proposed Regulation be made. This Option provides the
greatest net benefit for the community taking into account the costs and benefits entailed.
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