The Government’s Industrial Relations changes
Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008
The Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 (Transitional Act) commenced operation on 28 March 2008.
The Transitional Act was the first stage of implementation of Labor’s ‘Forward with Fairness’ policy announced during last year's Federal election campaign and makes certain amendments to the Workplace Relations Act 1996 (Cth) (Act).
Readers will be well aware that Labor foreshadowed a number of changes to Australia’s workplace relations landscape during the last election. The changes introduced by the Transitional Act are primarily geared toward transitional matters and leave most of the substantive aspects of Labor’s policy to be implemented at a later date. For instance, the Transitional Act does not: change the unfair dismissal laws; change the laws regulating industrial action; change the regulation of the building and construction industry; or change right of entry rules.
Draft legislation giving effect to Labor’s substantive changes is expected to be published over coming months and to commence operation from 1 January 2010.
The new IR Laws
Australian Workplace Agreements and Individual Transitional Employment Agreements
From 28 March 2008, employers and employees are no longer able to make Australian Workplace Agreements (AWAs).
However, AWAs that were made and lodged before, or within 14 days after, 28 March 2008 will continue to operate until they are terminated or replaced.
The Transitional Act introduced a new type of industrial instrument called an Individual Transitional Employment Agreement (ITEA).
ITEAs can be made until 31 December 2009 between:
- an employer that had at least one employee on an individual employment agreement (such as an AWA or a pre-reform AWA but not a common law contract) at 1 December 2007; and
- an existing employee employed under an individual employment agreement (not a common law contract); or
a new employee.
The Fairness Test and the No Disadvantage Test
The Fairness Test, which was previously applied to workplace agreements once made and lodged with the Workplace Authority, has been replaced by a No Disadvantage Test (NDT) which will apply to new ITEAs and collective agreements and to variations of workplace agreements.
ITEAs and collective agreements will need to be lodged with the Workplace Authority once made, and will then be assessed against the NDT (rather than the old Fairness Test).
To pass the NDT, an ITEA or collective agreement must not reduce the relevant employee's overall terms and conditions of employment when compared with a collective agreement, an award or the Australian Fair Pay and Conditions Standard (if there is no collective agreement or award).
The Transitional Act repealed the section of the Act which set out ‘protected award conditions’. Protected award conditions are no longer required in the Act because, under the NDT, the whole of the award (or collective agreement) can be used for comparison with the ITEA or collective agreement rather than just the protected award conditions. This could provide employers and employees with more flexibility in agreement making, as passing the relevant test will not necessarily require a focus on just the amounts payable in respect of allowances, penalties and the like.
The Transitional Act also changed the circumstances in which different types of workplace agreements start operating:
- ITEAs for new employees, employer greenfields agreements and union greenfields agreements will commence operation as soon as they are lodged with the Workplace Authority (as was the case for AWAs before the changes commenced). Once lodged, these agreements will be assessed against the NDT and will cease to operate if they fail the NDT. In these circumstances, employers may be liable to compensate employees for the time the failed agreement was operating, and the parties would revert to the industrial instrument that applied before the agreement was lodged (such as an award or a collective agreement);
- ITEAs for existing employees, employee collective agreements and union collective agreements will only start operating if and when the Workplace Authority finds that the agreement passes the NDT.
Current workplace agreements
Under the new laws, AWAs and collective agreements made prior to 28 March 2008 will continue to operate under most of the current rules.
Award modernisation
The new laws also set out the means for the creation of ‘modern awards’.
On 1 April 2008, the Minister for Employment & Workplace Relations requested the Australian Industrial Relations Commission (Commission) to begin the task of creating modern awards which are intended to “ensure a fair and simple minimum safety net for all employees”. The award modernisation process is underway and is to be completed by 31 December 2009.
The Government has announced that there will be 10 “allowable matters” in modern awards. These are:
- minimum wages, skill-based classifications and incentive-based payments, piece rates and bonuses;
- types of employment, such as full-time, causal, part-time, and the facilitation of flexible working arrangements;
- arrangements for when work is performed, including hours of work, rostering, notice periods, rest breaks and variations to working hours;
overtime rates;
- penalty rates;
- annualised wages or salary arrangements;
- allowances;
- leave, leave loadings and arrangements for taking leave;
- superannuation; and
- procedures for consultation, representation and dispute settlement.
Modern awards will also provide industry-specific details on the 10 National Employment Standards and will provide an appropriate benchmark for collective agreement making.
The Government’s policy is that employees earning more than $100,000 will not be bound by awards.
The Workplace Relations Fact Sheet
Employers will no longer be required to give employees a Workplace Relations Facts sheet as was previously required under the Act.
Existing pre-Work Choices agreements
Pre-Work Choices certified agreements can be extended and varied by the Commission upon application by the parties. This is to ensure that employers and employees can continue using their current agreements and avoid making transitional agreements and then having to make new agreements once the Government’s entire legislative package is in place by the end of 2009.
Termination of agreements
Unilateral termination of collective agreements that have passed their expiry date is no longer permitted. Instead, the parties can agree to terminate, or a party can apply to the Commission, which can terminate, a collective agreement if it is satisfied that the termination would not be contrary to public interest.
Functions of the Australian Fair Pay Commission
The Australian Fair Pay Commission will be restricted to carrying out annual minimum wage cases; its current inquiries into the make-up of Australian Pay and Classification Scales will cease as these are considered more appropriately dealt with as part of the award modernisation process.
National Employment Standards
In presenting the bill for the Transitional Act to the parliament, the Minister announced that she would be releasing an exposure draft of the proposed National Employment Standards (NES), which comprise a series of new guaranteed minimum conditions of employment for all employees. The NES will replace the Australian Fair Pay and Conditions Standard in 2010. The NES were released on 16 June 2008. A summary of the new standards is set out below:
Maximum weekly hours
- Full-time employees to work a maximum 38-hour week.
- Employer may request or require an employee to work reasonable additional hours.
- Employee may refuse additional hours if they are unreasonable.
Request for flexible working arrangements
- Parent or carer of a child may request a change in work arrangements.
- Employee, other than a casual employee, will require at least 12 months of continuous service before being entitled to make request.
- Casual employee must be employed on systematic basis for at least 12 months before being entitled to request.
Parental leave and related entitlements
- Employee who has at least 12 months of continuous service qualifies for 12 months of unpaid parental leave.
- Other parent is allowed to take 12 months of unpaid leave subsequently, but not concurrently.
- Up to three weeks of concurrent leave may be taken at the time of birth or adoption.
- An additional 12 months of unpaid leave available if employer agrees.
Annual leave
- Four weeks for full-time employees; five weeks to award defined shift workers.
- Cashing out of annual leave permitted in accordance with a term of an award.
Personal/Carer’s leave and compassionate leave
- Ten days of paid personal/carer’s leave.
- Two days of unpaid carer’s leave per occasion needed when paid personal/carer’s leave entitlements are exhausted.
- Two days of compassionate leave per occasion needed.
Community service leave
- To be made available to enable jury service or voluntary emergency management.
- Employers required to pay employee for first 10 days of jury service only.
Long service leave
- Entitlement to award-derived long service leave continues.
- Exceptions where long service leave dealt with in certain instruments including a workplace agreement made before the NES commence operation and a pre-reform AWA.
- Long service leave entitlements planned to change in the future when a consistent national standard is agreed between the State and the Federal governments.
Public holidays
- Eight national public holidays plus days designated in States and Territories.
- Employer may make reasonable request for employee to work a public holiday.
Notice of termination and redundancy pay
- Period of notice will be dictated by length of employment.
- National redundancy pay standards will be introduced.
Fair Work Information Statement
- To be provided to every new employee.
Conclusion
The Government’s next challenge is to finalise the drafting of legislation enacting its substantive changes to workplace relations law. We expect to see the Government’s draft bill later this year. The substantive changes are scheduled to commence operation on 1 January 2010.
FURTHER ENQUIRIES
