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					            WORKPLACE RELATIONS
                RELATIONS REFORMS

On 13 February 2008, the Workplace Relations Amendment (Transition to Forward with Fairness) Bill
2008 was tabled in Parliament. The reforms are intended to take effect as soon as the legislation is
passed by Parliament. However, the Senate has referred the Transitional Bill to a Senate Inquiry which is
required to report back by 28 April 2008. In addition, the Opposition has indicated that it is likely to
oppose certain parts of the Transitional Bill. Therefore it is likely to be some time before the legislation
takes effect. Other significant changes will be introduced in subsequent substantive legislation which is
expected to come into effect in 2010. You should be aware of the following key points about the
reforms and their implications in preparing business strategies for 2008.

What you need to know now

Australian Workplace Agreements (AWAs

The most significant change to be made by the Transitional Bill is a prohibition on the creation of new
AWAs from the commencement date of the Transitional Bill. Importantly, the laws will not
retrospectively invalidate existing AWAs. This means that if an employee is currently a party to an
AWA, that AWA will remain unchanged until it is terminated or replaced.

Individual Transitional Employment Agreements

An employer who had at least one employee on an individual employment agreement such as an AWA
as at 1 December 2007 can enter into new Individual Transitional Employment Agreements (ITEAs
with individual employees who either were employed under an AWA (or a Preserved State Agreement
or an individual Victorian Employment Agreement) or are new employees. Such agreements must have
a nominal expiry date no later than 31 December 2009 and pass a ‘no disadvantage test’ (No
Disadvantage Test (discussed below). If no AWA or ITEA applies, employees will revert to being
covered by the applicable collective agreement or awards and the Fair Pay and Conditions Standard.

Award Modernisation

The Transitional Bill empowers the Australian Industrial Relations Commission (AIRC to begin an
award simplification, rationalisation and "modernisation" process.

The modernised awards will be able to contain 10 allowable award matters and other terms specified in
an award modernisation request made by the Minister. The matters which may be included in the
modern awards include terms about minimum wages, types of employment, when work is performed,
including hours of work, notice periods, rest breaks, overtime rates, allowances, leave and loadings,
superannuation and consultation, representation and dispute settlement.

The modern awards will not take effect until 2010.

To begin with, the modernisation process requires the AIRC to identify by 30 June 2008 the priority
awards to be modernised. The AIRC will then undertake a process of consultation and then modernise
the awards. In modernising the awards, the AIRC may include the National Employment Standards
(discussed below). A modernised award cannot exclude the National Employment Standards or contain
provisions which operate inconsistently with these Standards. The modernised awards will also allow for
facilitation of flexible working arrangements, particularly for employees with family responsibilities.

The protected award conditions introduced by Work Choices will be abolished and the whole award
will be relevant to the application of the No Disadvantage Test.
The Transitional Bill also abolishes the provisions of Work Choices which prevent awards applying to
employees after a workplace agreement is terminated.

No Disadvantage Test

After the Transitional Bill takes effect, all new collective agreements, non-union agreements and ITEAs
will be tested by the Workplace Authority to ensure that a worker’s overall terms and conditions are
not reduced when compared to the relevant ‘reference instruments’. For collective agreements, the
reference instrument could be the relevant Federal Award or NAPSA (see below), among other

For ITEAs, the reference instrument could be the relevant collective agreement and/or the relevant
Federal award or NAPSA depending on the circumstances.

The Transitional Bill also deals with the operation of the No Disadvantage Test in the circumstances of a
transmission of business.

Collective Agreements

Although the Government has indicated that it will not substantially change the existing industrial action
provisions, it does intend to reinvigorate collective bargaining.

Under the Transitional Bill:

    •    unilateral termination of a collective agreements is no longer permitted and they can only be
         terminated by the AIRC in certain circumstances; and

    •    pre-Work Choices collective agreements can be extended and varied by the AIRC.

Notional Agreements Preserving State Awards (NAPSAs

NAPSAs include the instruments which were known as State Awards prior to Work Choices. Under
Work Choices they were expected to cease to have any effect from 31 March 2009. This date has been
extended to 27 December 2009.

Workplace Relations Fact Sheet

The requirement for employers to provide the Fact Sheet is abolished.

Long Term changes

In addition to the changes to be made in the Transitional Bill, the Government has indicated that, after
consultation, it will introduce a Bill with more substantive changes to the Work Choices Legislation in
           Substantive Bill).
mid 2008 (Substantive Bill These changes are expected to take effect in 2010.

In addition to the operation of the modernised awards from 2010, the National Employment Standards
will come into effect, and a new industrial umpire, "Fair Work Australia" will be created.

Significantly, the Government has also indicated that the Substantive Bill will provide for awards to cease
to apply to employees earning more than $100,000 per annum from 2010. There will also be significant
substantive and procedural amendments to the unfair dismissal jurisdiction. Finally the coverage of the
national workplace relations system is expected to be extended to include all private sector employees
in Australia.

National Employment Standards

The 10 minimum National Employment Standards will be introduced in the Substantive Bill. The
standards will apply to all employees of constitutional corporations (similar to the current Australian Fair
Pay & Conditions Standard). Importantly, there will be a minimum standard for periods of notice of
termination and redundancy entitlements, maximum hours of work, annual leave, personal, carers and
compassionate leave, community service leave, public holidays, a requirement to provide flexible work
arrangements for parents where possible, extended parental leave entitlements and uniform national
long service leave entitlements.

An exposure draft of the National Employment Standards was released on 14 February 2008 for
feedback before the Substantive Bill is released.

Unfair Dismissal

A number of the current exclusions from unfair dismissal laws will be abolished, including the 100
employees or less exemption and the redundancy or "genuine operational reasons" exemption. Instead,
the qualifying period of service will be amended to exempt employees with less than 12 months service
for employees of employers with less than 15 employees, or 6 months service for employees of
employers with 15 or more employees. The salary limit on unfair dismissal for employees not covered
by awards will remain.

What you need to do now?

       Employers are still able to register AWAs until the Transitional Bill comes into effect. If an
       employer is in the course of negotiating an AWA to which an employee agrees, it is important to
       register it as soon as possible.

       Employers who currently use AWAs should determine which awards or collective agreements
       would apply to their employees when the AWAs cease to operate. Such awards or collective
       agreements will become the basis of an employee's entitlements when the AWAs cease to apply
       and be relevant to the No Disadvantage Test for future agreements. If no collective agreement
       will apply, employers should determine whether to negotiate one, offer ITEAs or revert to any
       applicable modernised awards.

       Employers who intend to enter into collective agreements in the next few years need to consider
       the impact of the changes and plan the timing and strategy for their negotiations as soon as

       When employing new employees, employers should consider the likely changes to industrial
       laws. Employers should evaluate the terms and conditions of employment applicable at their
       workplace against those in the National Employment Standards. This is because employers will
       not be able to amend existing employees’ contracts without their agreement, when the
       legislation comes into effect.

       Given that the National Employment Standards will introduce a redundancy pay scale, employers
       should consider the timing of any proposed restructures now. Employers should also evaluate
       their employee redundancy entitlements against the standard in the National Employment

       For employees whose terms and conditions are governed by former State Awards which are
       now NAPSAs, employers should consider whether workplace agreements or written contracts
       of employment should be entered into with these employees or reviewed before the NAPSA
       expires in December 2009. This is particularly important for terms such as notice of termination
       because in the absence of such a term in a contract or industrial instrument, courts will imply a
       requirement to provide ‘reasonable notice’.

       This is a high level summary of the proposed legislation. For more information please contact:

       Ruveni Kelleher                   Bob Baxter                       Eve Thomson
       P: 02 8274 9591                   P: 08 8239 7116                  P: 08 8239 7174
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