The main features of the Federal Workplace Relations system:
While it is the Government's intention to introduce one national workplace relations system, this is not possible without the consent of all states. Therefore, the Federal Government used the 'corporations powers' of the Australian Constitution as the basis of the Federal Workplace Relations Act 1996. Because of this, certain categories of employees are largely exempt from the federal system, including 'crown employees' ie state and federal government employees, and employees of non-constitutional corporations, such as trusts, sole traders and some partnerships.
Employers who are non-constitutional corporations and their employees currently in the national system by membership of a registered organisation or by direct respondency to a federal award) have the existing federal awards and agreements continuing to apply for a period of five years, after which, the minimum conditions of employment will revert to the relevant state or territory award.
Minimum wages
Minimum wage rate is the rate applicable to relevant employees as set by the Australian Fair Pay Commission, based upon the previous pay rates in relevant federal award or state awards. The rate is known as the relevant Australian Pay and Classification Scale (APCS). A standard Federal Minimum Wage (FMW) is also set for employees who do not have a higher basic periodic rate of pay, except junior employees and disabled workers where lower pay regimes are currently in place.
The Australian Fair Pay Commission (AFPC) sets the minimum wage rates.
The applicable minimum wage rate is payable for all hours worked, unless a higher rate is designated in an award for overtime etc.
Australian Fair Pay and Conditions Standard
The Act provides that four conditions of employment; ordinary hours, annual, personal/carers; and parental leave; are subject to a universal statutory minimum applying to all constitutional corporations. (Parental leave is a universal condition applying to all Australian employees, regardless of whether they are employed by a constitutional corporation.)
If frequency of payment of wages is not specified in an award, agreement or contract of employment, then payment must be at least fortnightly in arrears.
A casual loading percentage of 20% is guaranteed, subject to the power of the AFPC to adjust the percentage to reflect industry conditions etc.
While an employee remains under an APCS which prescribes a higher casual loading, the employee is guaranteed a casual loading percentage prescribed by that APCS. If an employee negotiated a workplace agreement with their employer, the employee would be guaranteed the default casual loading percentage as part of the Minimum Standard. The guarantee of casual loadings, however, does not apply to a casual employee covered by an APCS if that APCS does not contain an applicable casual loading provision, and the casual employee is not covered by a workplace agreement.
An employee must not be required by an employer to work more than an average of 38 (ordinary) hours per week (plus reasonable additional hours) over the employee’s agreed 'averaging period' (which must not be more than 12 months).
Additional payment for hours worked in excess of 38 hours will be a matter for awards and agreements. However, an employee must not be paid less than the relevant basic periodic rate of pay for all hours the employee is required to work. Penalty rates will remain part of awards and agreements.
Ordinary hours of work remains an allowable award matter. Awards may provide for fewer than 38 hours as ordinary hours, but will no longer be able to provide for ordinary working hours above 38 hours per week. The Fair Pay and Conditions Standard also provides that an employer may require an employee to work reasonable additional hours.
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Annual leave of 4 weeks is provided, 5 weeks for continuous shift workers. Cashing-out of up to two weeks per year is permitted on request from an employee and agreement of employer, provided cashing out is also contained within a workplace agreement.
All employees are entitled to 10 days personal leave per annum, which accrues if untaken.Such leave can be taken as sick leave or carer's leave.Only 10 days accrued personal leave may be used as carer's leave in any year. In addition, up to 2 days unpaid carers leave for each occasion is provided. This entitlement extends to casual employees. Limited cashing-out is possible.
Up to 2 days paid leave per occasion may be taken by an employee in order to visit a seriously ill or dying relative, or for the purposes of grieving the death of a relative.
Parental leave
Unpaid parental leave continues to apply under essentially the same conditions as previously applied. However, there are some changes relating to things such as, the minimum period a mother must take as maternity leave and circumstances where an inability to transfer to a safe role, pre-maternity leave, will result in the employee being entitled to additional paid leave.
A day off with pay is provided for seven identified public holidays and a right to reasonably refuse to work on an identified public holiday. These are:
- New Year's Day
- Australia Day
- Anzac Day
- Good Friday and Easter Monday
- Christmas Day and Boxing Day.
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- Individual Transitional Employment Agreements (ITEAs)
- Employee collective agreements
- Union collective agreements
- Union Greenfield agreements
- Employer Greenfield agreements
- Multiple-business agreements.
Until 27 March 2008 Australian Workplace Agreements (AWAs) were also available.
'Collective' agreements are those made by an employer with more than one of its employees; 'Greenfield' agreements are those made for a new business which has not yet commenced employing relevant employees.
AWAs, collective agreements, and union greenfield agreements have a nominal term of up to 5 years.Employer greenfield agreements have a nominal term of 1 year. ITEAs have a nominal term of up to 31 December 2009.
The Act provides that a range of current terms and conditions in awards - to the extent that they are 'allowable award matters' - are protected. The following matters are still allowed to be covered by awards:
- hours of work, span of hours, rest breaks and notice periods
- incentive-based payments and bonuses (but not tallies in the meat industry)
- annual leave loadings
- ceremonial leave
- leave for seeking other employment, after notice is given
- public holidays
- monetary allowances for: (i) expenses incurred in the course of employment; or (ii) responsibilities or skills that are not taken into account in rates of pay for employees; or (iii) disabilities associated with the performance of particular tasks or work in particular conditions or locations
- loadings for working overtime or for shift work;
- penalty rates
- redundancy pay
- stand-down
- dispute settling procedures
- outworker conditions
- any other matter specified in the regulations.
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Non-allowable award matters
Non-Allowable Award Matters are matters which will be prohibited in awards:
Preserved award entitlements
Special provisions apply to 'preserved award entitlements' - covering established award conditions such as:
- annual leave
- personal/carers leave
- parental leave, including maternity and adoption leave
- long service leave
- notice of termination
- jury service
- superannuation (until 30 June 2008).
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Collective agreements and AWAs (if AWA wage is less than $75,000 pa) lodged after 7 May 2007 until 27 March 2008 were required to meet a ‘fairness test’ – meaning they must not be unfair when compared to certain award conditions that would otherwise apply to the work in issue.
From 28 March 2008 all workplace agreements are required to meet a ‘No Disadvantage Test’ - meaning that they must not result, or would not result, on balance, in a reduction in the employee’s overall terms and conditions of employment when compared to certain collective instrument and awards that would otherwise apply to the work in issue.
Outworker conditions are given a special status so that they apply if the workplace agreement provides a lower standard of protection to the outworker.
An entity which can be covered by the Act (such as a constitutional corporation) can be bound by the outworker conditions of an award although not acting as an employer. This means that the outworker conditions can apply to an entity higher up the supply chain.
The normal ban on restricting contractors in awards - because restrictions on contractors are not 'allowable award matters' - do not apply in outworker conditions.
The AIRC must begin the process of modernising awards which it should complete by mid 2009.
New employer bound by award
The legislation considerably weakens the application or carry-over of awards/agreements to the new employer when a business is sold. However in such a situation, where an employee transfers with the business, the general rule is the award or agreement will transfer to cover the transferring employee's conditions, but only for 12 months. (There are exceptions to this rule.)
Industrial action is harder to lawfully take and more difficult to sustain as a result of the amendments to the Act under the WorkChoices amendments.
The laws governing union right of entry have been modified by the Act and are relevant to entry of union officials to all premises operated by a constitutional corporation.
States' industrial coverage
All employees of constitutional corporations currently covered by state industrial relations systems move into the federal system. The terms of former state awards and agreements will become enforceable under the federal system as transitional agreements. Existing wages and conditions in former state awards and agreements remain largely unchanged.
The Act incorporates state awards as 'notional agreements preserving state awards' (where there is no state agreement also applying). Notional agreements continue to operate until replaced, the employer becomes bound by a federal award or until 31 December 2009. They can be replaced by a workplace agreement at any time and protected industrial action can be taken in support of a workplace agreement.
The Act incorporates state agreements as 'preserved state agreements' which are immune from protected industrial action during their nominal term and continue to operate until replaced or terminated.
The aim is to encourage employees and employers for whom those terms and conditions have been preserved to enter into workplace agreements under the new federal laws.
As the Federal Government has power to directly legislate in relation to IR in Victoria, there are provisions fast tracking the implementation of the standards on pay and conditions to be set by the Fair Pay Commission.
Those employers and organisations bound by awards prior to 27 March 2006 continue to be bound. Minimum and award classification wages will be at the level set after the inclusion of the increase from the Australian Industrial Relations Commission's 2005 Safety Net Review. Minimum wages in the AFPCS will not fall below this level and are subject to future increases determined by the Fair Pay Commission.
The system of federal awards will continue to apply for the time being, however, all awards, including state awards (referred to as notional agreements preserving state awards) will ultimately be modernised.
Award provisions which are more generous than the Fair Pay and Conditions Standard (minimum wages, hours of work, annual leave, personal/carer's leave, and parental leave) will continue to apply.However, if an award (including a previous state award) provides for an entitlement less than the minimum conditions under the Australian Fair Pay and Conditions Standard, the federal standard will apply to that particular condition.
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Agreements
An agreement in place at the commencement of the legislation (including a preserved state agreement) will continue to operate beyond its nominal expiry date until terminated or replaced. These old agreements may be terminated after their nominal expiry date using the termination provisions which applied under the federal Workplace Relations Act, as it was prior to the WorkChoices amendments.
It should be noted that the minimum conditions provided under the Australian Fair Pay and Conditions Standard, ie. federal minimum wage, annual leave, hours of work, personal/carer's leave, and parental leave, do not apply to a current federal certified agreement or a preserved state agreement where the agreement prescribes a lesser condition than the Standard.
Australian Industrial Relations Commission (AIRC)
The AIRC retains certain existing powers to vary awards (including to remove uncertainty or ambiguity, remove discriminatory provisions and to reflect changes in the names of organisations or persons bound by an award) and can only otherwise vary an award as part of the award modernisation process or where the variation is considered to be essential and necessary to the maintenance of a minimum award safety net.
The AIRC is not able to vary or adjust non allowable matters in existing awards, eg. long service leave, superannuation, notice of termination and jury service). Any new awards will not be able to contain these non-allowable matters.
Award free employees, employees and certain new organisations entering from state systems will be able to apply to the AIRC to be bound by a federal award.
Corporations only
The Act only applies to constitutional corporations (this will include companies that have commenced objectives as a significant part of their activities).An unincorporated legal entity, eg. sole trader or partnership, is notcovered by the unfair dismissal provisions of the legislation.However, the unlawful dismissal provisions continue to apply nationally.
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Unlawful dismissal v unfair dismissal
It will still be 'unlawful' to dismiss an employee for certain reasons (see below). The Act, however, removes the ability to bring 'unfair' dismissal proceedings where an employer employs 100 employees or less.
This has created some confusion among employers and employees, as there appears to be, on face value, little difference between the two types of dismissal, although the distinction between them is quite significant.
Unlawful dismissal claims may only be brought where the reason for dismissal includes such matters as: race, sex, marital status, union membership, etc.Unfortunately for employers, if an allegation of unlawful dismissal is made, the onus is placed on the employer to disprove the allegation.For this reason, appropriate pre-dismissal processes remain vitally important.
State laws which provide a remedy for termination of employment no longer apply, this includes state unfair contracts jurisdictions for constitutional corporations.
100 employees threshold
Unfair dismissal laws apply to employers employing more than 100 employees. The 100 employees threshold includes full time and part time employees and any casual employee engaged on a regular or systematic basis for a period of at least 12 months at the time of the dismissal (all other casuals are excluded).The qualifying period for new employees is six months, although the maximum probationary period before its length needs to be justified remains at 3 months.The Australian Industrial Relations Commission is able to hear certain types of jurisdictional matters so that an application which is excluded can be dismissed expeditiously.
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Constructive dismissal - onus of proof
Where an employee claims 'constructive dismissal' by the employer, the onus of proof is reversed, so the argument must now be made out by the employee. A 'constructive dismissal' is where the employee alleges that the employer's conduct left the employee with no alternative but to resign, as opposed to a voluntary resignation by the employee.
Operational requirements
The Act also provides an exclusion from unfair dismissal laws where the reason for the dismissal is genuine operational reasons (e.g. redundancy of position) or for reasons that include genuine operational reasons. In such circumstances, an employee is excluded from bringing an unfair dismissal claim.
Unlawful dismissal provisions
The Act includes provisions dealing with unlawful termination. This type of dismissal is where the reason for the dismissal is based on the employee's race, religion, family responsibilities, physical or mental disability, marital status, pregnancy, sexual preference, temporary absence due to personal ill health or injury, and similar discriminatory reasons.
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State jurisdictions
State anti-discrimination laws will not be affected. However, employees wishing to make a case for unlawful dismissal as a result of discrimination are onlyable to make a claim in one jurisdiction.
Unfair contracts jurisdictions (NSW and Qld)
State laws that provide a remedy for termination of employment, including state unfair contracts laws, are overridden by the Act. This affects certain jurisdictions, such as New South Wales and Queensland, which have legislation allowing an employee to apply to the relevant industrial tribunal to seek compensation for alleged unfairness of their employment contract.
Such cases have generally been pursued by non-industrial instrument employees, such as senior executives.This is a particularly litigious jurisdiction requiring hefty financial resources because of the high legal cost involved in representation.
Small business redundancies
Businesses with fewer than 15 employees are exempted from having to pay severance pay for redundancies.
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