News & Publications

The Bill

• Australian Workplace Agreements and Interim Transitional Employment Agreements

The Bill provides that from its commencement date employers and employees will no longer be able to make AWAs. 

However, AWAs that are:

• currently in place will remain in force until terminated in accordance with the current rules;
• made and lodged before the commencement date will continue to operate until they are terminated or replaced; or
• made before the commencement date and lodged within 14 days after the commencement date will continue to operate until they are terminated or replaced.

The Bill also introduces 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 who was not previously been employed by that employer.

• The Fairness Test and the No Disadvantage Test

The Fairness Test, which is currently applied to workplace agreements once made and lodged with the Workplace Authority, will be 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 subjected to the NDT (rather than the 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 Bill repeals the section of the Act which sets out the ‘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 Bill also changes the circumstances in which different types of workplace agreements start operating:

• ITEAs for existing employees, employee collective agreements and union collective agreements will only start operating once the Workplace Authority finds that the agreement passes the NDT.  Currently, workplace agreements start operating as soon as they are lodged with the Workplace Authority.
• 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 is the case for workplace agreements now).  Once lodged, these agreements will be subjected to the NDT and will cease to operate if they fail the NDT.  In these circumstances employers may be liable to pay compensation to 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).

We assume that by providing that ITEAs for existing employees, and employer and union collective agreements do not commence operation until after passing the NDT that the process of having workplace agreements assessed by the Workplace Authority will be quicker than the current assessment process. 

• Current workplace agreements

The Bill provides that AWAs and collective agreements made prior to the commencement date of the Bill will continue to operate under most of the current rules.

• Award modernisation

The Bill also sets out the means for the creation of ‘modern awards’ and the award modernisation process which is to be completed by 31 December 2009. 

 

Under the Bill, the Australian Industrial Relations Commission (Commission) will undertake the award modernisation process in accordance with the terms of an 'award modernisation request' made by the Minister to the President of the Commission. 

 

The Bill also sets out 10 allowable modern award matters.  These are:

1. minimum wages, skill-based classifications and incentive-based payments, piece rates and bonuses;
2. types of employment, such as full-time, causal, part-time, and the facilitation of flexible working arrangements;
3. arrangements for when work is performed, including hours of work, rostering, notice periods, rest breaks and variations to working hours;
4. overtime rates;
5. penalty rates;
6. annualised wages or salary arrangements;
7. allowances;
8. leave, leave loadings and arrangements for taking leave;
9. superannuation; and
10. procedures for consultation, representation and dispute settlement.
    

Modern awards will also provide industry-specific details on the 10 National Employment Standards (NES) and will provide an appropriate benchmark for collective agreements making.

The Bill also details terms that must not be included in modern awards, including terms that breach freedom of association provisions and terms about right of entry.

The Government’s policy is that employees earning more than $100,000 will not be bound by awards.

• The Workplace Relations Fact Sheet

Under the Bill, employers will no longer be required to give each of their employees a Workplace Relations Facts sheet as is currently required under the Act.  This change is designed to reduce the administrative burden on employers.

• Existing pre-Work Choices agreements

The Bill also provides that 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

Under the Bill, 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

Under the Bill, the Australian Fair Commission will be restricted to carrying out annual minimum wage cases; its current inquiries into the make-up of Australian Pay and Classification Scales are to cease as these are more appropriately dealt with as part of the award modernisation process.

• National Employment Standards

In presenting the Bill to the Parliament, the Minister also announced that she would be releasing an exposure draft of the proposed NES, which will replace the Australian Fair Pay and Conditions Standard in 2010.  These will apply to all employees regardless of whether they are covered by an award or not.  The NES will include minimum entitlements to the following:

• hours of work;
• parental leave;
• flexible work for parents;
• annual lave;
• personal, carers and compassionate leave;
• community service leave;
• public holidays;
• information in the workplace;
• notice of termination and redundancy; and
• long service leave.

We will provide further details when available.

Conclusion