Australia: What Will Labor’s Transitional Workplace Relations Bill Mean For Employers?

Last Updated: 25 February 2008
Article by Joe Catanzariti

The first wave of Labor's workplace relations reforms has hit with the introduction of the transitional workplace relations bill to Parliament, beginning the rollback of Work Choices.

Until the bill becomes law, the current workplace relations laws will continue to apply. The latest developments indicate this could occur before Easter with the Coalition changing its position in relation to the timing of a Senate Committee Report back to Parliament.

This means the Workplace Agreements (AWAs or collective agreements) can still be made under current laws and, if applicable, subject to the Fairness Test.

Importantly, the bill establishes a new type of employee agreement and reintroduces a "no disadvantage" test for workplace agreements, that is similar to the no disadvantage test that applied before the commencement of Work Choices in March 2006.

Australian Workplace Agreements Can Still Be Made - For Now

Employers will no longer be able to make AWAs from the date the Bill becomes law.

If an AWA has been made by this date, an employer will be given 14 days in which to lodge the agreement.

Existing AWAs will continue to operate until terminated or replaced.

New Transitional Type Of Individual Agreement - The ITEA

Some employers who have been using AWAs will be able to use a new kind of individual agreement, called an Individual Transitional Employment Agreement ("ITEA").

These are similar to AWAs in that they will operate to the exclusion of awards and collective agreements.

ITEAs will only be available to employers who had at least one employee on an AWA as at 1 December 2007.

Employers will be able to make ITEAs with new employees or with existing employees whose employment is already regulated by an ITEA or AWA.

ITEAs will only be available to employers until 31 December 2009. They must have a nominal expiry date no later than that date.

At this stage it is unclear whether ITEAs in operation will continue to operate past their nominal expiry date. This issue will be clarified when the Government introduces its substantive legislation over the coming months.

At the end of their nominal expiry date, ITEAs can be replaced by a collective agreement. This is different to the current rules where, despite the fact an AWA may have passed its nominal expiry date, it will still prevail over a collective agreement.

"No Disadvantage" Test

A "no disadvantage test" will be applied to ITEAs and to collective agreements, replacing the current "fairness test".

For ITEAs offered to new staff, employer greenfields and union greenfields agreements, the agreement will take effect upon lodgement. The "no disadvantage test" will then be applied to these agreements.

For ITEAs offered to existing staff, and for employee collective agreements and union collective agreements, the agreement will only take effect seven days after the Workplace Authority has decided it passes the test. This is a move away from the current system where all workplace agreements operate upon lodgement.

A workplace agreement passes the No Disadvantage Test if the Workplace Authority is satisfied that the agreement does not result, or would not result, on balance, in a reduction in the employee's overall terms and conditions of employment under what is described in the bill as a "reference instrument" that relates to the employee. That is, workplace agreements will be compared to other industrial instruments to decide whether it passes the No Disadvantage Test.

The "reference instrument" for ITEAs will be an applicable collective agreement, an award, or if there is no such instrument, an appropriate "designated award". For collective agreements the "reference instrument" will, generally speaking, be an award or possibly an award designated by the Workplace Authority.

If an agreement that is in operation fails the test, an employer will have 30 days to rectify the agreement. If the test is passed, the agreement will continue to operate.

Termination Of Collective Agreements

An employer will no longer be able to unilaterally terminate collective agreements after their nominal expiry date.

If an employer intends to terminate a collective agreement after the nominal expiry date (or other parties including employees), an application may be made to the Australian Industrial Relations Commission who may terminate the agreement where it is not against the public interest.

Award Modernisation

The bill provides for the commencement of the award modernisation process.

This process will be undertaken by the AIRC, and will see awards simplified so that they are made up of around ten allowable modern award matters.

What Next?

The key thing for employers to remember is that nothing will happen until the date from which the bill becomes law. Until then, AWAs can still be made. It should be noted, however, this may be less than a handful of weeks away.

We will keep you informed of any developments in this vital area.

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.

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