Australia: Transition To Forward With Fairness Bill To Come Into Effect Imminently

Last Updated: 26 March 2008
Article by Andrew Cunningham

On Tuesday 18 March 2008, the Senate passed the Workplace Relations Amendment (Transition to Forward with Fairness) Bill (Transition Bill), with some amendments that were proposed by the Government. The amended Transition Bill has also been passed by the House of Representatives, and is awaiting Royal Assent before it comes into effect.

It is likely that the Transition Bill will receive Royal Assent in the next week or two (perhaps the next day or two). From the date of commencement of the Bill, new Australian Workplace Agreements (AWAs) will not be able to be made and the Australian Industrial Relations Commission (AIRC) will begin the 'award modernisation' process.

There are other important changes that will be made by the Transition Bill, once it becomes law, including the introduction of the new No Disadvantage Test (to replace the Fairness Test) and a capacity for the parties to agree to vary and extend pre-reform certified agreements, subject to certain conditions and the approval of the AIRC. We discussed those changes in our HR&IR Update dated 14 February 2008.

Implications for Employers

  • From the commencement of the Transition Bill, new AWAs will not be able to be made (although a 14 day grace period applies for lodging AWAs that were made before the Transition Bill commences). Employers who have been using AWAs will need to decide whether to move to ITEAs, collective agreements or common law contracts.
  • Employers currently bound by a pre-reform certified agreement or preserved State agreement should give serious consideration to making an agreement to vary and extend the existing agreement, rather than making a new agreement. Many unions may prefer to roll-over an existing agreement, to avoid the need to re-draft the entire agreement in order to comply with the prohibited content rules and other requirements that have been introduced since WorkChoices commenced. There are some advantages for employers because unions cannot take industrial action if they want to utilise these provisions.
  • The award modernisation task will now begin in earnest. The timelines will be tight (awards to be modernised by 1 January 2010), and the AIRC will have a significant challenge as it seeks to standardise minimum terms and conditions across various employers and types of employees. Employers would be well-advised to keep a keen eye on how their awards, and their industry, will be affected by award modernisation.
  • Changes to the 'prohibited content' rules may be imminent. Employers should 'watch this space'for further developments.

In addition to the changes discussed in our earlier HR&IR Update, the Senate and the House passed a number of amendments to the Transition Bill. In summary, these latest amendments will (once the Transition Bill becomes law):

  • enable the Workplace Authority to take into account State and Territory long service leave laws when applying the no disadvantage test;
  • enable 'eligible employers' (those who had an employee covered by an AWA (or similar agreement on 1 December 2007) to make Individual Transitional Employment Agreements (ITEAs) with former employees when they rejoin the employer, subject to certain limitations;
  • ensure that outworker conditions in awards are protected;
  • allow the parties to vary and extend preserved State collective agreements in a similar fashion to pre-reform certified agreements; and
  • make a number of amendments to clarify and correct the meaning of the original Transition Bill.

The amendment which allows 'eligible employers' to re-engage former employees on ITEAs is significant. It was sought by various employers as part of the Senate Committee process, and the employers' requests were acceded to by the Government. However, all ITEAs will still have a nominal expiry date of no later than 31 December 2009.

Employers in States other than Victoria may also be interested in the new provision which will allow the AIRC to vary and extend preserved State agreements. This amendment is similar to a provision in the original Transition Bill, discussed in our HR&IR Update dated 14 February 2008, relating to pre-reform certified agreements.

It will allow employers, employees and unions to roll-over existing pre-WorkChoices agreements for a period of up to three years, until after the new workplace relations system is implemented on 1 January 2010.

What's next?

The Transition Bill, as amended, will probably commence in the next week or two.

It is likely that, at the same time, the Government will issue regulations that amend the Workplace Relations Regulations 2006. The new regulations could also substantially vary the rules regarding what 'prohibited content' must be excluded from workplace agreements. Whether the Government uses this opportunity to change the 'prohibited content' rules remains to be seen.

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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