Australia: Workplace Relations Update, November 2006

Last Updated: 23 November 2006


  • High Court rules WorkChoices is here to stay
  • Did you know.... the Australian Fair Pay Commission recently handed down a decision increasing the Federal Minimum Wage
  • WorkChoices – more tinkering
  • Victorian Long Service Leave
  • It's time to review those employment policies
  • Court of Appeal warns employers about OH&S Obligations

High Court rules WorkChoices is here to stay

The High Court of Australia has today handed down the much-anticipated decision on the challenge brought by the States and unions in relation to the validity of WorkChoices.

The High Court has, by a 5:2 majority comprising Chief Justice Gleeson and Justices Gummow, Hayne, Heydon and Crennan, dismissed the challenge to the validity of WorkChoices stating that "the plaintiffs' several challenges to the validity of the Amending Act (WorkChoices) all fail" and upheld WorkChoices in its entirety.

The basis of the challenge centred on the submission that the corporations power, under the Constitution, was restricted to a power to regulate the dealings of constitutional corporations with persons external to the corporation, but not with employees (or prospective employees). It was also argued that the corporations power should be read down in light of the Commonwealth's power in relation to conciliation and arbitration.

The majority questioned:

"If, in the exercise of its powers under s51(xx), the Commonwealth Parliament can regulate the terms and conditions on which constitutional corporations may deal with their customers or their suppliers of goods or services, why can it not, in the exercise of the same powers, regulate the terms and conditions on which constitutional corporations may be deal with employees, or with prospective employees?".

Dissenting Justices Kirby and Callinan both held that WorkChoices was invalid.

Employers should have been complying with WorkChoices since 27 March 2006. The decision today confirms that the majority of employers now fall within federal system.
by Mark Sant

Did you know.... the Australian Fair Pay Commission recently handed down a decision increasing the Federal Minimum Wage

The Australian Fair Pay Commission (the Commission) has recently handed down its first federal wage-setting decision under WorkChoices.

Who does the decision affect?

The decision affects all employers who are covered by WorkChoices. However, the decision does not apply to employees:

  1. covered by a five-year transitional federal award;
  2. covered by an Australian Workplace Agreement or certified agreements approved prior to the commencement of WorkChoices; or
  3. covered by a preserved state agreement.

The decision increases minimum wages for affected employees.

When does the decision come into effect?

While the decision is expressed as taking effect from 1 December 2006, this is defined as meaning midnight, 30 November 2006. This distinction is important for businesses who have affected employees working night shift.

The decision

The Commission has increased the Federal Minimum Wage (the FMW) and adjusted the basic periodic rates of pay in Australian Pay and Classification Scales (the Pay Scales) that were derived from minimum wage provisions contained in pre-reform wage instruments (i.e. federal or state awards instruments in existence immediately before 27 March 2006).

The Commission's first decision has three elements:

  1. an increase of $27.36 per week to the standard FMW;
  2. an increase of $27.36 per week to all Pay Scales up to and including $700 per week; and
  3. an increase of $22.04 per week to all Pay Scales over $700 per week.

This means that based on a 38-hour week, the standard FMW and all Pay Scales up to and including $700 per week are increased by $0.72 per hour and all Pay Scales over $700 per week are increased by $0.58 per hour.

Additional increase

Pay Scales derived from a pre-reform federal wage instrument that was not adjusted for the Australian Industrial Relations Commission's (the AIRC's) 2005 Safety New Review but

  • was adjusted in accordance with the AIRC’s 2004 Safety Net Review decision;
  • were not adjusted in accordance with the AIRC’s 2004 Safety Net Review decision but received a safety net adjustment during the 12 months prior to 27 March 2006; or
  • took effect after the AIRC’s 2004 Safety Net Review decision,

are further increased by $17 per week in addition to the increases referred to above.

Other matters

Casual employees will also receive the benefit of the increases as the base rates to which their casual loading will apply is also increased by the above amounts.

Junior employees and employees to whom training arrangements apply will also receive the benefit of the increases as the base rates against which their pay rates are calculated are also increased by the above amounts as follows:

  • where there are existing formulas for the calculation of the wage rate (eg. 60 per cent of a specified adult rate), the employee will continue to receive 60 per cent of the new higher rate; or
  • where there is no formula, the increase will be pro-rated so that the junior rate retains its relativity to the relevant adult rate.

What does this mean?

Employers should determine whether the increases apply to their business.

If increases apply, employers should ensure that affected employees are paid a base rate equal to or greater than the applicable minimum rate of pay (contained in the Pay Scale and if no Pay Scale applies, the standard FMW) from midnight, 30 November 2006.

The next review?

The Commission has stated that it will deliver its second general wage-setting decision mid 2007.
by Mark Sant and Nicole Linton

WorkChoices – more tinkering

On 13 November 2006, the Federal Government announced further changes to WorkChoices. These changes will:

  • preserve redundancy entitlements of employees under terminated workplace agreements, for a period of twelve months;
  • cap the accrual of annual leave and personal/carer's leave where employees work more than 38 hours a week;
  • change the payment rules for paid personal/carer's leave;
  • provide for the cashing out of paid personal/carer's leave subject to a floor;
  • provide a right to stand down employees where work is unavailable due to factors outside the control of employers; and
  • change the record keeping requirements to reduce the administrative burden on employers.

We will provide you with further information about the proposed changes once the draft amendments are available. In the meantime, click here to see Kevin Andrews media release.

The above proposed changes are on top of the changes made to the WorkChoices regulations on 22 September 2006.

The most significant change is that employers are provided with a further six-month period to comply with the record keeping requirements.

The amendments also affect the rules relating to personal and annual leave under the Australian Fair Pay and Conditions Standard and prohibited content rules.

The key aspects of the amendments are summarised below.

Record keeping – the transitional period for compliance with the record keeping requirements is extended to 26 March 2007. Penalties apply for non-compliance after this period and a number of industries have been identified by the Office of Workplace Services for targeted audits.

Accruing annual leave in advance – the amendments confirm that accruing of annual leave in advance of service does not provide a less-favourable outcome than the Standard under WorkChoices.

Leave accrued before the Australian Fair Pay and Conditions Standard – the amendments:

  • provide that the Standard does not apply to personal leave or paid compassionate leave entitlements accrued before the Standard applied to an employee. This regulation will cease to have effect at the end of a five-year transitional period on 26 March 2011;
  • clarify that the annual leave rules under the Standard will not apply to annual leave accrued before the Standard applied.

This means that rules regarding rates of payment, crediting, accrual, notice and evidentiary requirements do not apply to leave accrued before the Standard applied to an employee. Significantly, it also means that the limitations imposed by the Standard on the amount of annual and personal leave that may be cashed out by an employee do not apply to leave accrued before the Standard applied to an employee.

Cashing out of leave

The amendments provide that a workplace agreement which permits the cashing out of leave entitlements, other than at the written election of an employee, will breach the prohibited content rules.

Penalties for work absences due to illness, injury or emergency

New regulations have been introduced which restrict and/or prohibit the operation of provisions in agreements that penalise employees for:

  • an absence due to illness, injury or emergency affecting the employee or a member of their immediate family or household; or
  • failing to provide the required evidence or notice for personal/carer’s or compassionate leave.

  • by John-Anthony Hodgens

Victorian Long Service Leave

Employers should be aware of recent further amendments to the Service Leave (Preservation of Entitlements) Act 2006 (VIC) which have been made in response to WorkChoices.

The Act came into effect on 1 October 2006 to protect employees’ accrued long service leave entitlements and preserve any superior long service leave standards contained in current industry awards.

The amendments require employers to give their employees at least seven days' notice if any workplace agreement has the effect of modifying their long service leave entitlements. Therefore, if a new collective agreement or Australian Workplace Agreement modifies the previous long service leave entitlement, including under the Victorian Long Service Leave Act, formal notice must be given to the employees.
by Dan Feldman and Mark Steogen

It's time to review those employment policies

A recent decision of the Federal Court highlights the need for all employers to carefully review any policies they have in place and ensure that they are up-to-date and accurately reflect the relevant employer’s position as the policies may form part of an employee’s contract of employment.

The relevant case is that of Nikolich v Goldman Sachs J B Were Services Pty Limited [2006] FCA 784.

The Nikolich circumstances

In May 2000, Nikolich accepted an offer of employment as a financial adviser with Goldman Sachs (the Company). At the time he was given his letter of offer, he was provided with several documents, including the Company’s 'Working With Us' policy (the Policy). The Policy set out information about the Company, including codes of conduct relating to harassment, support for health and wellbeing and procedures for handling of concerns and grievances. The letter of offer contained a paragraph that referred to the Policy by stating: "from time to time the Company has issued and will in the future issue office memoranda and instructions with which it will expect you to comply".

Nikolich had his employment terminated by the Company on 6 December 2004 following a long-running dispute during which Nikolich made a number of complaints in relation to the conduct of his supervisor. This led to the deterioration in their relationship to the point where Nikolich claimed his supervisor was aggressive, intimidating and threatening towards him. Nikolich claimed that his complaints were not handled in accordance with the Company's Policy and that his work conditions resulted in him suffering work-related stress and depression which was also not managed by the Company in accordance with the Policy. Nikolich's absence from work, due to this illness, was the reason his employment was ultimately terminated.

The finding that the Company's policies formed part of the contract of employment

While a number of the arguments raised by Nikolich were dismissed, of significance was Justice Wilcox’s finding that the terms of the Policy formed part of Nikolich's contract of employment and was binding on the Company and Nikolich.

Previous cases

Justice Wilcox referred to the decision of Riverwood International Australia Pty Limited v McCormick [2000] FAC 889, which held that a document called "Human Resources Policies and Procedures Manual" bound the employer so as to entitle an ex-employee to redundancy benefits. In that case, Justice Mansfield held that:

"in general, its policies are expressed in terms which are entirely apt to be treated as expressing mutually enforceable obligations; they are clear, precise, direct and mainly deal with matters which one might expect to be encompassed within a particular employment contract."

Intention of the parties

In the current case, Justice Wilcox found that it was difficult to accept that the parties did not intend, at least, that the obligations contained in the Policy, that were obligations customarily found in employment contracts, would be contractually binding. The question then became whether the Company had any contractually binding obligations as the result of provisions in the Policy dealing with behavioural standards.

Mutual obligations

Justice Wilcox held that as the Company insisted that Nikolich comply with the behavioural standards, and directions of the Company, the Company also had contractually binding obligations to comply with the behavioural standards and promises contained in the Policy.

The breaches of the policy

The Company was held to have breached Nikolich's contract of employment where it was shown that it breached various parts of the Policy including:

Grievance procedures – the Company had not responded to a problem or complaint in the manner promised or assumed in the Policy. Justice Wilcox held that the promise of support for health and well-being includes an implied promise to carry out an adequate and timely investigation into the merit of any complaint or grievance and to endeavour to achieve a result that will resolve the problem and accord with the Company’s culture of each member of the team being able to "work positively and productively". The investigatory steps taken by the Company’s HR manager, and the delay in which any action was taken, was inadequate.

Harassment – the supervisor's behaviour was intimidating and demeaning and it was foreseeable that such behaviour might cause psychological damage to Nikolich. He was in breach of the Policy which stated that "all people within the team will work together to prevent any unwelcome, uninvited or unwanted conduct".

Safe and healthy work environment – his supervisor's behaviour, the lack of urgency in carrying out and resolving Nikolich’s complaint and not taking action to terminate the supervisor's supervision of Nikolich (if appropriate) was inconsistent with the Company’s promise to take "every practicable step to provide and maintain a safe and healthy work environment". It was also inconsistent with the statement asserting that "each person is able to work positively and is treated with respected and courtesy".

The damages

Also of significance for employers is the large damages payout that was awarded to Nikolich as a result of the findings. Nikolich was awarded damages of around $500,000 which was equivalent to approximately two and half years pay.

The Company has appealed the decision.

What does this mean for employers?

  • HR policies can be found to form a relevant and important part of an employee's contract of employment
  • Employers must comply with the terms of such policies or they may be liable for a breach of contract claim
  • Employers should be mindful of what appears to be an increased willingness on the part of the courts to award large amounts of damages.

  • by Nicole Linton

Court of Appeal warns employers about OH&S Obligations

A recent decision of the Victorian Supreme Court of Appeal sends a strong warning to employers as to steps to take to ensure workplace safety.

In September, the Court of Appeal considered an appeal by Commercial Industrial Construction Group Pty Ltd (CIC) against a $35,000 sentence, imposed on it by the County Court of Victoria, for a breach of the Victorian Occupational Health and Safety Act 1985 (OH&S Act). CIC had pleaded guilty to a charge of failing to provide and maintain, as far as practicable, for employees a working environment that is safe and without risks to health.


CIC was engaged in refurbishing a four-storey building. Part of the building works involved the removal of a section of the roof. The site manager of CIC directed an employee to erect some scaffolding beneath the roof. The employee had no scaffolding qualifications. The scaffolding he erected was unsafe and was in the wrong place so that the roof work had to subsequently be completed from the roof itself.

Before any work on the roof could begin, CIC’s safety management system required the site manager to carry out a job safety analysis. However, the site manager did not do so. A labourer was sent onto the roof without any safety protection or safety instruction. While working on the roof, the labourer slipped through an opening in the roof and fell three metres to the concrete floor below. He suffered reasonably minor injuries and was off work for one week.

The following morning, the site manager directed another employee up onto the roof to finish the job. The site manager did not give the second employee any safety instructions or put in place any additional safety procedures or fall protection. The hole in the roof had not been fixed. The second employee continued to work on the roof for over an hour. At that point, union officials arrived and stopped the work because of safety concerns. A WorkSafe Inspector was called and issued a prohibition notice on working at heights at the site.

The Hearing

In court, CIC argued that, although the failings of the site manager were to be attributed to the company, as a matter of law, the company had done all it could by establishing a safety management system and providing training for the site manager in that system – including the need to conduct job safety analyses.

In dismissing the appeals, the court restated that employers have an obligation to ensure, so far as is reasonably practicable, that working environments are safe. If a safety breach occurs, it is immaterial whether it occurs at the highest or lowest level of the employer’s workforce. The only question is whether, having regard to what had occurred, the company had fulfilled its duty to ensure the safety of its employees.

The Court stated that the employer had a statutory duty to provide information, instruction, training and supervision to its employees, so as to ensure that they perform their work in a safe manner. The Court stated that:

'…the formal adoption of a written safety system does not discharge the employer’s duty. Rather the employer must ensure that the procedures and instructions are actively and positively complied with by employees. Employee compliance with safety management must be constantly monitored by the employer.'

The Court did not accept CIC's submission that it's 'employees had failed the company'. In the Court’s view, the events suggested a poor or deliberate disregard of the safety management system by the site manager and the two employees were a consequence of the company’s failure over time to supervise and monitor employees sufficiently.

The Court believed that because of the gross safety breaches that occurred, the fine of $35,000 was very lenient and that, even though there was no Crown appeal against the sentence, in the Court’s view, the judge would have been well-justified in imposing a considerably higher fine.

Implications for Employers

The case has some significant implications for employers in relation to health and safety. The Court made the following findings:

  1. the formal adoption of a satisfactory safety management system will not have the beneficial effects intended unless it is accompanied by the employer’s active implementation of the system in the workplace. The employer’s duty will not be discharged simply by creating a safe system of work. The obligation requires that the procedures are actively and positively complied with by employees.
  2. employer’s should recognise that it is common experience that human error will be encountered in the workplace. Error can range from inadvertence, lack of attention or haste through foolish disregard of personal safety, to deliberate non-compliance with the prescribed safe system of work. An employer’s responsibility for the safety of its workers will not be discharged unless the employer takes 'an active imaginative and flexible approach to potential dangers in the knowledge that human frailty is an ever present reality'.
  3. the hierarchical level at which a safety breach occurs is immaterial. However, when the employee in question is the person with supervisory responsibilities, including responsibility for ensuring safety at the site, the gravity of the company’s breach is increased, not reduced.

Employers should note that since the date of the offence in question, the OH&S Act 1985 has been replaced by the OH&S Act 2004. The new Act contains the same general safety duty and the wording is generally unchanged. The Court of Appeal noted that the maximum penalty for a breach under the old OH&S Act was $250,000 and that this had been increased under the new OH&S Act to over $920,000.
by Dan Feldman and Mark Steogen

For more information, please contact:



Kathryn Dent

t (02) 9931 4715


Mark Sant

t (02) 9931 4744




Steven Troeth

t (03) 9612 8421


Dan Feldman

t (03) 9252 2510




John-Anthony Hodgens

t (07) 3231 1568




Nicholas Linke

t (08) 8233 0628




Joe Claudio

t (08) 9223 9223




Stephen Devenish

t (07) 4031 1622


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.