Australia: Employment Update - Proposed Amendments To The Workplace Relations Act 1996

Last Updated: 3 July 2007
Article by Nick Ruskin and John Pesutto

A new Fairness Test for workplace agreements

The Minister for Employment and Workplace Relations, Joe Hockey, has introduced into the House of Representatives the Workplace Relations Amendment (A Stronger Safety Net) Bill 2007. This Bill, likely to be enacted before the end of June 2007, introduces a new fairness test to be applied to certain workplace agreements.

The Bill also replaces the Employment Advocate and his office with the Workplace Authority Director and the Workplace Authority and the Office of Workplace Services with the Workplace Ombudsman and the Office of the Workplace Ombudsman.

What is the new fairness test?

The new fairness test requires the Workplace Authority Director (WAD) to decide whether certain AWAs and collective agreements fairly compensate employees when protected award conditions are excluded or modified. The protected award conditions are those set out in the Act, although outworker conditions are excluded from the new test because they already attract special protection.

The fairness test applies in the following circumstances.

In the case of AWAs

  1. To all AWAs (including variations to existing AWAs) lodged with the Workplace Authority on or after 7 May 2007.
  2. Where the employee concerned earns or will earn a basic rate of salary which is less than $75,000 per year or, if he or she is a part-time employee, earning less than the full-time equivalent of $75,000.
  3. Where the AWA operates when an employee works in an industry or occupation usually regulated by an award.
  4. Where the proposed AWA excludes or modifies protected award conditions that apply to the employee under a relevant award or a designated award (which the Workplace Authority determines should be used to assess the proposed AWA).

These four conditions must be met if the test is to apply.

In the case of a collective workplace agreement

  1. To all workplace agreements (including variations to existing workplace agreements) lodged with the Workplace Authority on or after 7 May 2007.
  2. Where, on the date of lodgement, one or more employees whose terms and conditions will be governed by the collective agreement is employed in an industry or occupation usually regulated by an award or which would, but for the collective agreement, usually be regulated by an award.
  3. The collective agreement excludes or modifies protected award conditions applying to those employees under either a relevant award or a designated award.

Importantly there is no monetary threshold for collective agreements.

What this means to you

The fairness test brings back a type of no disadvantage test for workplace agreements. Many employers will be familiar with this system. However, having adjusted to an agreement making process that removed that layer of regulation employers will again need to pay careful attention to the nature of their agreements which will be measured against an expanded safety net. Employers will also need to be mindful of the new role for awards and designated awards under the expanded safety net

For example, in the case of an employee with a designated award (and where no other agreement is in place) where an agreement fails the fairness test and is not fixed, the employee will retain the protected award conditions from the designated award.

How will the Workplace Authority assess agreements?

Workplace agreements will satisfy the fairness test if:

  • In the case of an AWA, the Workplace Authority is satisfied that the agreement fairly compensates the employee in lieu of the exclusion or modification of protected award conditions.
  • In the case of a collective agreement, the Workplace Authority is satisfied that, on balance, the collective agreement provides fair compensation, in its overall effect on the employees, in lieu of the exclusion or modification of protected award conditions.

In determining whether an employer is fairly compensating employees, the Workplace Authority must first consider the following:

  • The monetary and non-monetary compensation an employee or employees will receive in lieu of the protected award conditions.
  • The work obligations of the employee or employees under the agreement.

Fair compensation may also be considered in light of the personal circumstances of employees, including their family responsibilities.

In exceptional circumstances, and where the Workplace Authority does not consider it contrary to the public interest to do so, it may consider the industry, location or economic circumstances of the employee and the employment circumstances of the employee or employees (excluding any period of the employee's unemployment). These considerations can include any reasonable strategy to deal with a short term crisis and to assist in the revival of an employer’s business.

The Workplace Authority may contact employers and employees to obtain further information for the purposes of deciding whether an agreement passes the fairness test. This may arise to ensure nonmonetary benefits are genuinely of value to the employee. An example may be flexible rostering.

Importantly, non-monetary compensation means compensation for which a monetary value can reasonably be assigned and which confers a benefit or advantage on the employee which is significant to that employee. The Explanatory Memorandum to the Bill suggests that non-monetary compensation could include car-parking spaces, child care places or shares in the employer’s company while excluding meals such as a pizza at the end of a shift.

What this means to you

Employers will be looking for clear guidance and consistency in the application of the test. The manner in which the Workplace Authority undertakes its task will be of great interest as there is room for uncertainty in the assessment of non-monetary compensation and the application of the fairness test.

What happens if an agreement fails the fairness test?

The Workplace Authority must notify the parties of its decision about whether the agreement passes the fairness test. If the Workplace Authority decides that an agreement fails the fairness test in addition to notifying the parties of that fact, it must also tell the parties how the agreement can be varied to pass the fairness test (including by way of an undertaking by the employer) and state that compensation may be payable by the employer to the employee or employees. The employer will have 14 days, unless the Workplace Authority stipulates another period, to address the failure, either by variation (with appropriate agreement) or a written undertaking. During this 14 day period the agreement will continue to operate. If the employer fails to address the failure within that period, the agreement will cease to operate.

Even if the employer rectifies the failure, the employee or employees affected may be entitled to compensation in respect of any period (defined as the fairness test period) during which the agreement operated.

If the agreement ceases to operate because the employer has failed to rectify any failure, the employer and the employee or employees will, from the date on which the agreement ceased to operate, be bound by the relevant workplace agreement or award that applied or would have, but for the agreement. Importantly, it appears that this may include a designated award to the extent to which that designated award contains protected award conditions. As noted, a designated award will not have bound the parties prior to the agreement being lodged.

How is compensation determined?

If an agreement fails to pass the fairness test (even if it is later varied or the employer gives an appropriate undertaking in writing) employees may be entitled to compensation.

The amount of compensation will, in general terms, be the shortfall between the total value of the entitlements the employee was entitled to receive under the agreement and the total value of the entitlements which the employee would have been entitled to receive under a relevant award (including a designated award) or workplace agreement that would otherwise have applied.

If the employer fails to pay the shortfall, it may be subject to enforcement action by the Office of the Workplace Ombudsman. It may also face civil action from the affected employee or employees. In most cases, the time period within which employers must pay any shortfall will be 14 days of the date upon which an agreement ceases to operate because it has failed the fairness test.

There are also consequences for employers who:

  • Dismiss or threaten to dismiss employees because a workplace agreement does not or may not pass the fairness test.
  • Coerce employees to agree to the modification or exclusion of protected award conditions.

The Workplace Authority

Comparison between the old and the new

Office of Employment Advocate (OEA)
(principal functions)

Workplace Authority (principal functions)

Accepting agreements

The role of the OEA

Information role

Administering the fairness test

Research role

Providing a pre-lodgement facility

Disclosure of breaches to Office of Workplace Services

Comprehensive information service about pay and Conditions

The Workplace Ombudsman

Comparison between the old and the new

Office of Workplace Services (OWS)
(principal functions)

Office of the Workplace Ombudsman
(principal functions)


Appointment of a Workplace Ombudsman who has the same powers as a workplace inspector

More limited education function

Establishment of the statutory office - the Office of the Workplace Ombudsman

Enforcement role

Role of the OWS


Expanded education function


Expanded enforcement role

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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)
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.