The Federal Government has announced widespread changes to the Australian workplace relations system, by relying upon one of the heads of power under the Australian Constitution, namely the Corporations Power. This allows them to make laws with respect to Australian companies including constitutional corporations. It is their stated desire to have one set of laws governing workplace relations for the whole of Australia. Effectively where this is not possible the Australian Government wishes to see the states freely give up their powers in this area and refer them to them. This legislation deals with fair pay, workplace agreements, termination of employment, the role of various institutions, strike action, award simplification, further limits on union power, the rules governing entitlements of employees on transmission of business and the role of workplace inspectors.

Previously the area of employment law and more particularly that of unfair dismissal was governed in NSW by both the NSW Industrial Relations Act and the Federal Workplace Relations Act. In summary, remedies available under both Acts are almost identical in respect of unfair dismissal, constructive dismissal and unlawful termination. One of the major differences was where claims were brought under section 106 of the NSW Industrial Relations Act which allowed for unfair contract claims to be brought in circumstances similar to those which existed for unfair dismissal. In January 2005 there was a major change made to the Federal Workplace Relations Act which brought into play new sections which deal with the rights of independent subcontractors to bring claims based on unfair contracts.

The essential difference was that section 106 dealt with strict employment contracts whereas the Federal Workplace Relations Act only provided protection to independent contractors. As of 27 March 2006 there has been a fundamental change with the new Workchoices legislation coming into effect. Businesses with up to 100 employees will be exempt from unfair dismissal claims whereas larger businesses will not. That said, bigger businesses are afforded a greater protection due to the extension of the probationary period for new employees from three to six months. This provides these larger corporations with the opportunity to get to know their employees better before deciding whether to keep them or not. Employees terminated during this period will not be able to bring unfair dismissal claims even where they have been made redundant. Constructive dismissal claims are available in very limited circumstances and unlawful termination claims remain including discrimination on the basis of race, colour, sex, pregnancy and disability.

In Victoria the Kennett Government referred its power in the Industrial Relations environment to the Federal Government some years ago. In short all Victorian and territory businesses are covered under the new system because of this referral and not because the Federal Government is relying upon the corporation's power. All employees of constitutional corporations are covered by the system including all corporate businesses in all other states. According to the Federal Government approximately 85% of all businesses will be picked up although there is agitation by a number of state governments to prevent this occurring. There is little doubt that all unincorporated businesses will fall outside the system because they are not corporations.

Although these changes are supposed to lead to a simplification of the system this has not in fact occurred. There is a dual system operating both federally and within some states. Although corporations will be picked up, sole traders, partnerships and trusts will not, including doctors, farmers and some sporting groups to name but a few. In some cases the disenfranchised will be able to bring actions for breach of their employment contract and perhaps under the Trade Practices Act. All employees, irrespective of size of the business will no longer have the opportunity to plead that they have been unfairly treated and selected for redundancy.