Australia: Major Changes To Affect All Victorian Employers

Last Updated: 22 January 2004
Article by Anthony Wood

As a result of complementary legislation passed by the Victorian and Federal Parliaments, Victorian employees who are currently not covered by federal awards, agreements or Australian Workplace Agreements (AWAs) will be covered by an expanded regime of minimum terms and conditions of employment, many of which commenced from 1 January 2004. Also, commencing 1 January 2005, the Australian Industrial Relations Commission (AIRC) has been referred the powers to make 'Common Rule' awards to cover Victorian employees who are not already subject to federal award regulation. Additional details about the changes are set out below.

It is important that employers familiarise themselves with these changes, especially those to the minimum terms and conditions of employment. The changes are likely to affect staff employees and traditionally award-free employees such as clerical, administrative and sales personnel.

Situation pre 1 January 2004
Since January 1997, the Workplace Relations Act 1996 (Cth) (WR Act) has prescribed minimum terms and conditions for Victorian employees, except where those employees who are already covered by a federal award, certified agreement or an AWA. The minimum terms and conditions of employment were outlined in Schedule 1A of the WR Act and prescribed terms and conditions in respect of annual leave, sick leave, rates of pay for classifications of work, parental leave and notice of termination of employment. According to the latest data, approximately 1.1 million Victorians are subject to federal awards while approximately 560,000 Victorians are protected by the inferior conditions of Schedule 1A.

The minimum conditions for Victorian employees in Schedule 1A were included in federal legislation as a result of a referral of State legislative powers to the Commonwealth, following the abolition of the Victorian industrial relations system in 1996. All other States, except Victoria, have continued to retain State industrial relations systems which operate side by side with the federal system.

Further referral of Victorian power of the Commonwealth
In May 2003, the Victorian Parliament enacted the Federal Awards (Uniform System) Act 2003 (Uniform System Act). This Act provided for the referral of industrial relations powers to the Victorian Civil and Administrative Tribunal (VCAT) to make Orders applying federal award conditions as Common Rules in Victoria. In essence, the Uniform System Act amounted to the creation of a new Victorian industrial relations system. It also made provision for the Federal Parliament to be referred these same powers for the making of Common Rule awards in Victoria. If the Commonwealth accepted that referral (which it subsequently did), Victoria would not empower VCAT and the unitary system would remain.

In passing the Workplace Relations Amendment (Improved Protection for Victorian Workers) Act 2003 (Cth), the Minister for Employment and Workplace Relations, the Hon Kevin Andrews, MP, noted that the maintenance of a unitary workplace relations jurisdiction in Victoria 'will mean less confusion about jurisdiction and compliance for employers and employees alike. It would essentially represent an extension of the system which already exists in the Australian Capital Territory and the Northern Territory.' The Commonwealth also proposed transitional arrangements to give employers time to adjust to the new award provisions.

What of the major changes?
Effective from 1 January 2004, the minimum terms and conditions of employment for Victorian employees are amended to provide:

  • Victorian employees with an entitlement to payment for work performed in excess of 38 hours a week (previously, Victorian employees had no right to receive a payment for hours in excess of 38 hours whether such additional payments amounted to or included overtime loadings or not)
  • Victorian employees with an entitlement to eight days personal leave, which can be taken as sick leave, with up to five of the eight days available to be taken as carer's leave
  • an entitlement to two days bereavement leave for the death of a member of their family or of their household
  • that bereavement leave, personal leave and annual leave do not apply to casual employees
  • more detailed provisions concerning the calculation of annual leave and rules pertaining the taking of annual leave (eg the amended Schedule 1A provides that annual leave accrues on a pro rata basis and is cumulative and must be taken within 12 months after the end of the year in which it accrued unless the employer and the employee have otherwise agreed)
  • additional detail pertaining to sick leave including an employee's responsibilities and the requirement for a medical certificate. The relationship with workers' compensation is also dealt with in the amended Schedule 1A.

Other changes commencing after 1 January 2004
The federal legislation also introduces the following changes:

  • Expanded rights for workplace relations inspectors to enter premises to investigate alleged breaches of the WR Act in respect of Schedule 1A employees.
  • Where a contract of employment does not contain a stand-down provision, the contract is taken to include the following provision:

'the employer may deduct payment for any part of a day during which an employee cannot usefully be employed because of any strike, breakdown of machinery or any stoppage of work for any cause for which the employer cannot reasonably be held responsible; and this does not break the continuity of employment of the employee for the purpose of any entitlements.'

Employers should be aware that these provisions do not override the stand-down provisions contained in an existing federal award, agreement or AWA.

  • Another significant change is for outworkers in the textile, clothing and footwear industry (TCF industry) in Victoria. The WR Act now provides an entitlement for contract outworkers in the TCF industry in Victoria to receive at least the minimum hourly Schedule 1A rate of pay applicable to TCF industry 'employees'. These are significant changes for the TCF industry and will be accompanied by an education and investigation process by the Department of Employment and Workplace Relations, culminating in a report on compliance with the legislation in relation to outworkers within three months from the commencement of the amendments.
  • Granting intervention rights to the Victorian Government in respect of certain proceedings before the AIRC.

The other big change — Common Rule awards for Victoria
Although Victorian employees will have enhanced rights under the expanded Schedule 1A, the Uniform System Act also gives the AIRC the power to declare that a federal award shall operate as a 'Common Rule' for an industry in Victoria. The making of a Common Rule award by the AIRC would result in the AIRC choosing the 'most appropriate and relevant' federal award for an industry when considering an application for Common Rule. This means that entire industries in Victoria can be covered by a federal award without the constraints of respondency, which currently limit the federal system.

Where there is a provision in a contract of employment or in Schedule 1A that is inconsistent with a Common Rule Order and which provides less favourable employment conditions, the Common Rule Order will prevail.

There are transitional provisions in place which provide that any declaration of Common Rule made by the AIRC cannot come into force earlier than 1 January 2005. Accordingly, federal award conditions pursuant to the new provisions will not apply without interested parties being given the opportunity to have their interests heard in any proceedings.

Employers should be prepared for applications that are likely to be made by unions seeking a declaration of Common Rule awards in Victorian industries. Although such awards cannot be made to apply before 1 January 2005, proceedings can commence before that time. It may be some comfort for employers to know that Common Rule awards are subject to the usual limitations on the AIRC's powers (ie they are limited to 'allowable award matters' and subject to the usual limitations imposed by AIRC test cases).

In any event, there is a real prospect that existing non-award employees could be subject to a Common Rule application over the next year. This is especially likely in respect of industries with large numbers of casual employees and areas such as hospitality, sales and clerical work.

If I employ Victorian workers, what should I do?
Changes have already been made to the minimum terms and conditions of Victorian employees who are not already covered by federal awards, agreements or AWAs. Some of the changes which are described above may conflict with your existing arrangements. Accordingly, employers are advised to review their current policies and practices, particularly in the following areas:

  • sick leave
  • annual leave
  • bereavement leave, and
  • parental leave,

to ensure consistency with the changes to Schedule 1A.

You should review and compare your existing policies with the new minimum entitlements which can be accessed by the following link to Schedule 1A.

Employers will be exposed to penalties if they do not have adequate measures in place to comply with the new requirements as of 1 January 2004.

It may also be appropriate to alert your employees of any changes to policies to take into account the new legislation.

Finally, employers should prepare for the possibility that Common Rule awards could apply from January 2005 to parts of their workforce that are currently award-free. Employers might choose to conduct a gap analysis between their existing employment conditions and typical award conditions to assess the possible impact of changes in this area.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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