Australia: Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008

Last Updated: 27 February 2008
Article by Damian Sloan and Mark Howard

On 13 February the Government tabled the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008. The purpose of the Bill is to start the process of reform to the Australian industrial relations system that was promised by the Labor Party in the lead up to last year's election.

As the title of the Bill suggests, the Bill is focused primarily on transitional matters, in anticipation of the substantial reforms that are expected to be introduced into Parliament in the middle of this year.

The Bill is not yet law. However, to assist you to understand the direction in which the Government is travelling we provide the following summary of the key elements of the Bill:

Goodbye AWAs: Employers will not be able to make Australian Workplace Agreements (AWAs) after the commencement date of the legislation. Any existing AWAs will continue to operate in accordance with their terms. This will include AWAs that have been made before the commencement date, even if they have not been lodged with the Workplace Authority. To be effective they must be lodged within 14 days after the commencement date.

Hello ITEAs: A new individual agreement will be introduced - Individual Transitional Employment Agreements (ITEA). These are, for all intents and purposes, interim AWAs. They allow employers who currently have AWAs (or the State equivalents) with employees to maintain that type of arrangement until the substantive reforms take effect. They can only be used for an employee who is currently on an AWA (or a State equivalent) or for new employees. An ITEA will not be able to operate beyond 31 December 2009.

Welcome Back No Disadvantage Test: ITEAs and new collective agreements (or variations) will have to meet a No Disadvantage Test (NDT). The NDT is similar in many respects to the one which operated prior to the WorkChoices reforms. The way in which the NDT will apply may be summarised as follows:

  • any ITEA or collective agreement (including variations) must be lodged with the Workplace Authority. Agreements with new employees come into effect at this time
  • the Director of the Workplace Authority must assess the agreement against any "reference instrument". This may be an award or NAPSA and, for ITEAs, any collective agreement that would otherwise apply
  • the Director must be satisfied that the agreement does not reduce the employees' overall terms and conditions when compared with the reference instrument
  • if the agreement fails the NDT the Director must advise the employer how the agreement could be varied to pass the NDT and the employer can lodge a variation
  • if no variation is lodged the agreement will not come into force, or will be taken as not having come into force. Employees may be entitled to compensation for any shortfall between what they received under the agreement and what they were entitled to receive under the relevant instrument.

Award Modernisation The Bill will introduce a new process of award modernisation to be undertaken by the Australian Industrial Relations Commission (AIRC). The aim of the process is to create simplified and relevant awards that can operate as part of a safety net of terms and conditions. "Modern" awards will be able to contain 10 allowable award matters:

  1. minimum wages
  2. type of employment – full time, part time, casual and shift work
  3. arrangements for when work is to be performed – hours of work, rest breaks
  4. overtime rates
  5. penalty rates
  6. annualised wage or salary arrangements
  7. allowances
  8. leave, leave loading and arrangements for taking leave
  9. superannuation
  10. procedures for consultation, representation and dispute settlement.
Unlike the system which existed prior to WorkChoices, an award can apply to a class of employers. That is, awards will not necessarily be confined to named respondents. The process of award modernisation is to be completed by 31 December 2009 with all "modern" awards coming into force on 1 January 2010. Other than as part of the award modernisation process, the AIRC will have no power to make awards.

While it is not dealt with in the Bill, and in conjunction with the award modernisation process, the Government will be introducing National Employment Standards (NES). The NES will form part of the safety net of minimum entitlements. The NES will apply to all employees, regardless of whether they are covered by an award or not. These will replace the current Australian Fair Pay and Conditions Standard and will deal with the following matters:

  1. hours of work
  2. parental leave
  3. flexible work for parents
  4. annual leave
  5. personal, carer's and compassionate leave
  6. community service leave
  7. public holidays
  8. information in the workplace
  9. notice of termination and redundancy
  10. long service leave.

While it is expected that there will be some overlap between the NES and the AFPCS, the NES will impose significantly more onerous obligations on employers.

The Government has stated that an exposure draft of the NES will be released shortly. The Government has expressed an intention that the NES will be settled by 30 June 2008 in anticipation of coming into effect on 1 January 2010.

It is too early to say when, or even if, this Bill will become law. The Coalition may use its numbers in the Senate to delay the passage of the Bill. It is possible that the Bill will be amended throughout this process. However, the Bill is reasonably limited in its scope and, to a great degree, goes no further than the Government said it would go at this stage of the reform process. For these reasons, there is a strong possibility that the Bill could pass reasonably quickly with minimum amendment.

We will continue to keep you informed of developments.

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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