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Client Update: Workplace Relations – 22 February 2008

New legislation

In brief: The new Federal Government has taken its first steps in reforming our national workplace relations laws. Senior Associates Luke Gattuso and Joanna Musk report. 

Transitional legislation

The Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 (Cth) was introduced into Parliament on 13 February 2008. The main features of the Bill are set out below.

The Coalition has called for a Senate inquiry into the abolition of Australian Workplace Agreements (AWAs) under the Bill, although it has recently reversed its initial opposition to the Bill's passage through Parliament.

Australian Workplace Agreements
  • AWAs cannot be made after a commencement date to be proclaimed.
  • AWAs already made will continue to operate and will generally be subject to the existing provisions in respect of their termination.
Individual Transitional Employment Agreements

Individual Transitional Employment Agreements (ITEAs) will be available (with nominal expiry dates no later than 31 December 2009) for employers who employed at least one employee on AWA-style agreements as at 1 December 2007. These ITEAs can only be made for new employees (within 14 days of commencing work) or employees previously employed on AWA-style agreements.

No-disadvantage test

The Bill re-introduces a 'no-disadvantage test' that replaces the 'fairness test' for future workplace agreements (including ITEAs) made after commencement. Generally, in order to meet the no-disadvantage test, the Workplace Authority Director must be satisfied that a workplace agreement will not, on balance, result in a reduction in an employee's overall terms and conditions of employment, by comparison with certain reference instruments applicable to their employment.

Variations to future workplace agreements must also satisfy the no-disadvantage test.

Pre-WorkChoices agreements
  • The Australian Industrial Relations Commission (the Commission) will have the power to extend or vary pre-WorkChoices collective agreements until 31 December 2009, subject to the no-disadvantage test and other requirements.
  • The period of operation of Notional Agreements Preserving State Awards (NAPSAs) has been extended to 31 December 2009.
  • NAPSAs that ceased to operate because they were replaced by a workplace agreement may operate again if the workplace agreement subsequently ceases to operate.
Award modernisation

The Bill establishes a new process for modernising awards to be carried out by the Commission. Modern awards may provide for:

  • minimum wages;
  • the type of work performed (full-time, casual, etc);
  • arrangements for when work is performed;
  • overtime rates;
  • penalty rates;
  • annualised wage or salary arrangements;
  • allowances;
  • leave and related matters;
  • superannuation; and
  • consultation, representation and dispute-settling procedures.

Each modern award will include a model flexibility clause enabling the employer to make individual arrangements with employees. Modern awards may also contain industry-specific content in relation to the National Employment Standards (NES) described below.

Certain terms will be prohibited from inclusion in modern awards (including on issues of freedom of association, right of entry and discriminatory terms).

Other matters
  • Unilateral termination of collective agreements will be prohibited.
  • Employers will not be required to provide employees with the Workplace Relations Fact Sheet.
  • The Bill includes various transitional, consequential and other amendments.

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National Employment Standards

The Government has released a discussion paper on its draft NES for consultation ending on 4 April 2008. The NES are intended to come into operation on 1 January 2010 and will replace the Australian Fair Pay and Conditions Standard. Employers will not be able to contract out of the NES, but may negotiate more generous terms with employees.

The following draft NES are broadly similar to matters included in the current Australian Fair Pay and Conditions Standard:

  • maximum weekly hours;
  • annual leave;
  • personal and compassionate leave; and
  • minimum notice on termination of employment.

The draft NES also contain further minimum entitlements:

  • combined parental leave of up to 24 months, with a right of refusal on 'reasonable business grounds' where one parent is seeking to take more than 12 months;
  • the right to request flexible working arrangements, which may only be refused on 'reasonable business grounds';
  • community service leave (including jury service with make-up pay, and emergency service duties);
  • preservation of current long-service leave entitlements under state and territory laws, NAPSAs and awards until a national standard of long-service leave is introduced;
  • protection of public holidays;
  • redundancy pay (on the current Federal standard) for employers with 15 or more employees, but with transmission of business exceptions; and
  • provision of a Fair Work Information Statement.

We will continue to provide updates in relation to the Government's workplace relations reform.

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For further information, please contact:

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