Client Alert

Who does this affect?

All employers.

What do you need to do?

Consider the implications of the changes for your business. We can help you.

Authors
Robert Lilburne  
Partner

Murray Kellock  
Partner

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Murray Kellock  
Partner
T +61 3 9643 4172

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The first phase of the Rudd Labor Government’s reform agenda began this morning with the introduction of its transitional workplace relations bill into Parliament.

The Bill, entitled Workplace Relations Amendment (Transition to Forward with Fairness) Bill, primarily addresses the removal of statutory individual agreements. The Bill introduces transitional arrangements for workplace agreements pending the introduction of a new workplace relations system in 2010 and allows the process of award modernisation to commence. It also removes the previous government’s Workplace Relations Fact Sheet requirements.

AWAs

Once enacted, employers and employees will no longer be able to create new Australian Workplace Agreements (AWAs) or renew or vary existing AWAs.

AWAs in force when the Bill is enacted will continue to operate for their term as normal, until terminated in accordance with the current legislation.

ITEAs

The Bill also proposes the establishment of a new type of individual agreement called Individual Transitional Employment Agreements (ITEAs) for a two year transitional period.

However, only employers who had at least one employee on an AWA as at 1 December 2007 will be able to utilise ITEAs, and only in respect of a new employee or an existing employee whose terms and conditions are currently governed by an AWA.

ITEAs must have a nominal expiry date of no later than 31 December 2009.

Awards and collective agreements will not override an AWA or ITEA that remains in operation.

Awards

The Rudd Government proposes to commence an award simplification and modernisation process, the result of which will be awards that are limited to building on the minimum standards enshrined in legislation (see below) and dealing with a further ten matters, including overtime, penalty rates, loadings and consultation. It aims for this process to be “overwhelmingly” completed within two years.

The Bill empowers the Australian Industrial Relations Commission to commence this award modernisation and simplification process.

No-disadvantage test for workplace agreements

The Bill also proposes to introduce a new ‘no-disadvantage test’ for workplace agreements, replacing the current ‘fairness test’ that was introduced in May 2007.

Under this new no-disadvantage test, a collective agreement must not result, on balance, in a reduction in the overall terms and conditions of employment compared to a relevant award.

An ITEA must not disadvantage the employee when compared with the terms of any applicable collective agreement. If there is no collective agreement that would otherwise apply to the employee, the no-disadvantage test must be applied against a relevant award.

If there is no relevant collective agreement or award, the Workplace Authority may “designate” an award for purposes of the no-disadvantage test.

As under WorkChoices, all new agreements must also comply with the Australian Fair Pay and Conditions Standard.

Even where those no-disadvantage test requirements are not met, the Workplace Authority will be able to deem a collective agreement passes the no-disadvantage test if there are exceptional circumstances such that approval of the agreement would not be contrary to the public interest. The Authority would be required to publish reasons for its decision in these circumstances.

Other changes

Employers will no longer be able to unilaterally terminate collective agreements on 90 days’ notice after the nominal expiry date has passed. Collective agreements may only be terminated by agreement or by order of the Australian Industrial Relations Commission.

The Bill also makes provision for employees covered by AWAs or ITEAs to vote on new collective agreements once the nominal expiry date of the AWA or ITEA has passed.

The Rudd Government has also announced that it will tomorrow release an ‘exposure draft’ of amending legislation to introduce its proposed ten National Employment Standards. These will build on the AFPC Standard and introduce for the first time federally legislated minimum entitlements to matters such as flexible work for parents, community service leave, long service leave and redundancy. It is proposed that these National Employment Standards be in place by 2010, complemented by the modernised awards.

The Government aims to have the content of the National Employment Standards finalised by June this year, so that they may be taken into account by the Commission when undertaking its award modernisation responsibilities.

Final words

If passed, the changes proposed in the Bill will have immediate and significant implications for all employers currently utilising AWAs, and those proposing to enter into new ITEAs or collective agreements.

We will provide further updates to you once we have had the opportunity to further consider the Bill. It is important to note the Bill could be amended in its passage through Parliament, and indeed it appears highly likely the Bill will be referred to a senate committee for inquiry. Therefore its enactment may be delayed, perhaps at least until the composition of the Senate changes on 1 July 2008.

For more details about the Rudd Government’s legislative agenda for workplace relations, please see our Alert from November 2007.