Bills Digest no. 72 2007–08
Workplace Relations Amendment (Transition to Forward
with Fairness) Bill 2008
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
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Workplace Relations Amendment
(Transition to Forward with Fairness) Bill 2008
Date introduced: 13 February 2008
House: House of Representatives
Portfolio: Employment and Workplace
The substantive provisions
commence on Proclamation or six months after Royal Assent,
whichever is the sooner.
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
The Bill would amend the principal Act, the
Workplace Relations Act 1996 (WR Act) in order to:
- terminate the making of new Australian Workplace Agreements
- provide transitional arrangements by the creation of Individual
Transitional Employment Agreements (ITEAs) to run to 31 December
- replace the fairness test with a no disadvantage test to be
used to approve both ITEAs and collective agreements, and
- allow the modernisation of federal and former state industrial
The Workplace Relations Amendment (Transition to Forward with
Fairness ) Bill 2008 constitutes the first substantive piece of
legislation of the Rudd Labor Government following its success at
the federal election on 24 November 2007. In the election campaign,
and throughout 2007, Labor had campaigned on a platform of
repealing Work Choices . The Bill is directed at only one aspect of Work Choices
the abolition of AWAs although it also deals with the award
modernisation process and seeks to replace the existing fairness
test with a no disadvantage test.
The Bill is only step one in the ALP Government s proposed
changes with consultation over the main changes beginning later in
the year, with a view to the new workplace relations system fully
commencing by 1 January 2010 under forthcoming principal
The Bill derives from workplace relations policies released in
2007 prior to the federal election of 24 November. These being
Forward with Fairness followed by Forward with
Fairness Policy Implementation Plan.
In her Second Reading Speech, the Minister for Employment and
Workplace Relations, the Honourable Julia Gillard stated:
In April last year, we published our workplace
relations policy, Forward with Fairness, and confirmed that, if elected, we would
abolish Australian workplace agreements.
In August we released our Forward with Fairness policy implementation plan, which
reiterated Labor s commitment to abolish Australian workplace
agreements while setting out the sensible transitional arrangements
a Rudd Labor government would adopt for implementing this key
commitment. This policy made it clear that, when Labor s workplace
relations system was fully operational, there would be no AWAs and
no other statutory individual employment agreements.
Minister Gillard also stated that during the government s first
three months it had consulted on the Bill with the key employer and
employee representative organisations through the National
Workplace Relations Consultative Council and its subcommittee, the
Committee on Industrial Legislation. She said that as a result of
these consultations, the Government has also decided to adopt the
following recommendations arising from the parties at these
- removal of the restriction on referencing other industrial
instruments in agreements, which will simplify the drafting of
- requiring workplace agreements be lodged with signatures
attached to protect employees and ensure the correct agreements are
lodged for review and approval by the Workplace Authority
- ensuring that most agreements will take effect from seven days
from the date of the notice from the Workplace Authority Director
advising an employer that the agreement has passed the no
- preventing the making of unilateral undertakings when
agreements fail the no disadvantage test. If agreements are to be
genuine agreements, any variation should have the agreement of both
parties. The government has included streamlined approval rules for
variations to agreements in these circumstances
- requiring the Workplace Authority Director to publish reasons
where the Workplace Authority Director allows an agreement to pass
the no disadvantage test where satisfied that, due to exceptional
circumstances, it is not contrary to the public interest to do so
(for example to deal with a temporary business crisis)
- requiring the Workplace Authority to consult more widely when
designating awards for the purposes of the no disadvantage test
- ensuring that the transition period for a number of matters,
including the automatic expiry of notional agreements preserving
state awards the so-called NAPSAs old IR agreements, removal of
superannuation as an allowable award matter and the transitional
registration of organisations arrangements is extended to the end
of the government s transition period, 31 December 2009, to provide
continuity and certainty during the transition period.
These aims are reflected in the Bill s main provisions described
below at p. 8.
The following is a selection of commentary by key employer
organisation representatives. The common theme of these responses
and views is that the Bill tends to be a fair reflection of the ALP
s 2007 election policies and should not constitute significant
Acting Chief Executive, Peter Anderson:
I think the Government recognises that unless
award modernisation works effectively then the removal of statutory
individual bargaining is going to create some problems for
I think the Government is perfectly entitled to
stick to its position, but it has to push award modernisation very
hard to demand it produces flexibility in employment
The jury is still out from the business point of
view on whether award modernisation can deliver what the individual
statutory agreement system did, [ ]
The transitional bill was a measured piece of
legislation , and reasonably true to industry s understanding of
Labor s plan for the transition to Forward with Fairness.
General Manager Workplace Policy, Chris Platt:
The level of consultation with employer
organisations that WR Minister Julia Gillard undertook in the
lead-up to this week s tabling of the transitional bill marks a new
high point in consultation in IR terms .
(Minister) Gillard had used the National Workplace
Relations Consultative Council (NWRCC) and the Committee on
Industrial Legislation (COIL) exceptionally well and had developed
a better bill as a result .
From our perspective, the Government has done what
it said it was going to do; no more, no less ... We accept that
they ve got a mandate to remove AWAs and they ve done so.
AiGroup chief executive Heather Ridout
claimed the transitional bill to be balanced and
workable , saying it was shaped by a very constructive consultative
process . In a statement, Ridout said employers would have
preferred the option of AWAs, but in the absence of that the
Government has been prepared to take on board AiGroup s concerns
and to address the major transitional issues in a practical way .
The legislation was complex and would need to be studied, and any
concerns raised in submissions to the Senate inquiry, she said.
Ridout also hoped award modernisation would be the breakthrough
needed to succeed where so many previous attempts have failed
The Bill has been referred to the Senate Employment Workplace
Relations and Education Committee for inquiry and report by 17
March 2008. Details of the inquiry are at
Generally, submissions and evidence given in Committee hearings,
would indicate there is broad support for the Bill, despite calls
for further amendment and refinement. Some of these matters are set
out below. The reader is referred to the submissions (here)
for further detail.
AWAs and ITEAs
Some employer groups have called for ITEAs to be made available
more broadly. For example, the ACCI have asked that ITEAs be made
available to all employees; that their term should be extended to
five years; and that all employers should be allowed to offer ITEAs
to former employees.
No disadvantage test
There have been calls for refinement of the provisions relating
to the no disadvantage test. For example, the Shop, Distributive
& Allied Employees Association submission states employers
should be required to give affected employees copies of designated
awards they submit to the Workplace Authority for examination
against the no disadvantage test so workers can make an informed
choice before approving an agreement. The submission states:
It would appear fundamental that an employee can
only make an informed choice in relation to entering into an ITEA
or a Collective Agreement if they know how the Agreement is going
to be tested and against which instrument it is to be
Evidence to the Committee suggests
there is doubt about the feasibility of the December 2009 deadline
for modernising awards. It is reported that AiG national IR
director Steve Smith, warned against imposing too rigid a deadline
on the process via the Bill and the Minister s award modernisation
request to the AIRC. He noted that the 1998 'deadline' for award
simplification was not met then either and ran at least 18 months
over the deadline. Smith also pointed to the enormity of the task
and the drain on resources and said he would like to see the terms
of the modernisation proposal amended to require the Commission to
complete the task to the extent practicable .
Transitional arrangements and drafting
There is criticism relating to the Bill s complexity and
drafting style. Professor Andrew Stewart, while noting that the
drafting style is largely dictated by and consistent with, what is
already in the WR Act, he states that many of the new provisions
remain unduly complicated and difficult to understand, even for the
experts . In relation to the transitional arrangements, Professor
the difficulty of complying with rules that have
to be pieced together from amending statutes and multiple versions
of the same Act should not be underestimated.
Item 1 repeals and replaces section 326 with
proposed section 326: Individual Transitional Employment
The repeal of current section 326 would halt the making of
Australian Workplace Agreements (AWAs) after commencement.
Transitional arrangements for existing AWAs are set out in
proposed Schedule 7A (for further
discussion see page 12). AWAs made and lodged before the
commencement date of the legislation, or made before commencement
and lodged within 14 days after that date, would continue to
operate until terminated or replaced.
Under proposed section 326, ITEAs will only be
available to employers that on December 1 2007 employed a worker
under an individual statutory agreement, including an AWA, a
pre-reform AWA, an individual preserved state agreement, or an
individual Victorian employment agreement.
This restriction would prevent current non-AWA employers from
signing new workers up to AWAs in the expectation of having access
to the full transitional package contained in the Bill.
An ITEA can be made with an employee prior to commencing
employment. Where the employee has commenced employment, the ITEA
must be made no longer than 14 days after commencement.
ITEAs will have an expiry date of no later than December 31,
2009 (item 5 inserting proposed
The Bill would clarify that employees on ITEAs (and existing
AWAs) that have passed their nominal expiry dates would be able to
make and approve proposed collective agreements and would be
eligible to take part in ballots for protected industrial action
(proposed Schedule 7A, clause 8, see below at p.
Item 2 would repeal existing Division 5A of
Part 8 (the current fairness test of the WR Act), and replace it
with a new Division 5A (the no disadvantage test
(NDT)). The new test would apply to both ITEAs and collective
The fairness test was introduced into the WR Act by the
Workplace Relations Amendment (Stronger Safety Net) Act
2007. It was precipitated in part by reports at Senate
Estimates and in the media suggesting workplace agreements were
being lodged and taking effect with disregard for the protected
award conditions and even the Australian Fair Pay and Conditions
Standard (AFPC Standard). For a fuller account the reader
is referred to the Bills
essence, from 7 May 2007, the fairness test has required the
Workplace Authority Director to assess the agreement to ensure that
if award conditions were traded off, fair compensation was
However the key to any application of the fairness test is that
the employees work conditions are usually regulated by an
award. Manifestly, the test was not designed to apply to
repeat bargainers , that is, those who had moved off awards via
earlier certified agreements. Central to the Work Choices framework
was that, sooner or later, workplace agreements would meet only the
AFPC Standard of minimum conditions. These being only: a minimum
wage, personal leave, annual leave, a standard 38 hour week and
The pre Work Choices no disadvantage test on the other hand, was
based on the simplified award standard of 20 allowable matters and
did apply to both AWAs and to certified (collective)
The provisions in Item 2, essentially, seek to reinstate the pre
Work Choices NDT arrangements.
Proposed section 346B defines designated
award, industrial instrument and reference instrument
which may be used in assessing an agreement under the NDT.
Proposed section 346C allows the NDT to apply
to workplace agreements that are yet to operate, are in operation
or have ceased to operate.
Proposed section 346D stipulates that an ITEA
would pass the NDT if the Workplace Authority Director (WAD) is
satisfied that the ITEA would not result, on balance, in a
reduction in the employee s overall terms and conditions under any
Reference instruments are defined in proposed section
346E and differ depending on whether the agreement to be
tested is an ITEA or a collective agreement.
ITEAs must not disadvantage an employee against an applicable
collective agreement or, where there is no such collective
agreement, an applicable/designated award and the AFPC Standard
(proposed subsections 346D(1) and
Collective agreements must not disadvantage employees in
comparison with an applicable/designated award and the AFPC
Standard (proposed subsections
346D(2), 346E(4) 346E(5)), except where
the WAD approves an agreement as part of a reasonable strategy to
deal with an exceptional circumstance (such as short term business
crisis) (proposed subsection
If there is no reference instrument, ITEAs and collective
agreements are taken to have passed the NDT
(proposed subsections 346D(6) and
(7)), providing they comply with current section
172, that is by meeting the AFPC Standard. Given the WAD has the
power to designate an award (proposed section
346G) or replace a designated award with a more
appropriate one (proposed subsection 346G(6)) and
may designate an award after a workplace agreement is lodged where
there are no other relevant instruments (proposed section
346H), it must be assumed approving agreements without
reference to any award or reference instrument will be
The Bill would introduce a number of changes relating to the
circumstances in which workplace agreements commence operation.
Collective union and non-union agreements and ITEAs for
existing employees would only take effect after they pass
the NDT and the WAD approves them (item 3, Schedule 1,
proposed section 346L, and proposed paragraph
ITEAs for new employees and employer and union
greenfields agreements would apply from the date of lodgement with
the WAD, but would cease to operate if they later failed the NDT
(in the same way as the provisions apply under the fairness test)
(item 3, Schedule 1, proposed sections 346S and 346V,
proposed paragraph 347(1)(a)).
Where the agreement fails the NDT, compensation may be payable
to employees (proposed section 346ZG) and the
parties would revert to the instrument that applied before the
agreement was lodged (proposed section 346ZB).
Only workplace agreements, agreement variations and terminations
that meet fundamental requirements (such as employee approval)
would come into operation (item 4, proposed section
347A). Employers would be required to lodge copies of
signed workplace agreements and variations. If a document does not
come into operation because these requirements are not met, a Court
could order that the document is to have effect as if it were a
workplace agreement, variation or termination, but only if this
would not result in a reduction in an employee s overall terms and
conditions of employment (item 92, Schedule 1, proposed
Penalties and remedies for non-compliance with statutory
requirements that apply in relation to workplace agreements,
variations and terminations would also apply in relation to
documents that are represented to be workplace agreements,
variations and terminations (as in Part 8 of the WR Act).
All agreements will cease to operate or never operate if they
fail the NDT (proposed section
The Bill provides that employers would no longer have the power
to unilaterally terminate a collective agreement that has passed
its nominal expiry date, and return employees to a limited number
of minimum standards.
Under the Bill, a collective agreement will only be able to be
terminated where the parties agree (item 11, Schedule
1 deletes section 393), or by the
Australian Industrial Relations Commission (AIRC) in circumstances
where termination would not be contrary to the public interest
(item 12, Schedule 1, proposed section 397A).
When an agreement is terminated, employees will be entitled to
whatever award or workplace agreement would have applied to them
but for the terminated agreement.
AWAs can be terminated by either party on 90 days' notice and
the employee would then revert to the agreement or award that
applied in the workplace. Item 14, Schedule 1
would repeal current section 399 which prevents an award or
collective agreement from operating in relation to an employee when
the employee s AWA is terminated, and an award from operating when
a collective agreement is terminated.
Termination of ITEAs is set out in proposed section
393. ITEAs can be terminated by either party on 90 days'
notice and the employee would then revert to the agreement or award
that applied in the workplace (item 11, Schedule 1
repeals and replaces section 393).
The transitional arrangements for existing AWAs are set out in
proposed Schedule 7A (item 15). They would allow
the fairness test and existing termination provisions to apply to
AWAs made and lodged before commencement of this Bill, or to AWAs
lodged within 14 days of commencement of the Bill.
Proposed clause 1 provides definitions of
pre-transition Act (the WR Act in force before the
commencement of Schedule 7A) and AWA. AWAs are defined to
mean AWAs operative before the commencement of Schedule 7A but not
including pre-reform AWAs (made prior to 27 March 2006).
Proposed clause 2 allows pre-transition Act
terms to continue to apply to AWAs as defined. However provisions
under subclause 2(2) negate the application of
certain pre-transition Act terms. The effect of paragraph
2(2)(c) for example is to allow AWA employees to be
included in a roll for the purposes of conducting a secret ballot
prior to industrial action in support of a collective agreement.
The effect of paragraph 2(2)(d) is that when an
AWA is terminated, an employee could be covered by an applicable
collective agreement or award.
Proposed clause 3 negates the appointment of
AWA bargaining agents 14 days after the commencement of the
Proposed clauses 4 and 5 limit
the ability to vary AWAs. However, an AWA would be able to be
varied if the variation is made before commencement and lodged
within 14 days of commencement (subclause 5(2)).
AWAs would continue to be able to be varied under the
pre-transition Act to deal with matters arising under the fairness
test, the rules relating to prohibited content, removal of
discriminatory provisions or by order of the Federal Court
Proposed clause 6 allows an AWA to be replaced
by an ITEA but not another AWA.
Proposed clause 7 requires the Workplace
Authority Director to determine that an AWA or AWA variation was
ineffective, or otherwise not compliant.
Proposed clause 8 according to the Bill s
Explanatory Memorandum, allows an AWA employee (and other
employees) to make and approve a collective agreement without
having to terminate the AWA. Also they could take part in secret
ballot processes to seek protected industrial action providing the
AWA had not expired.
The transitional arrangements for existing collective agreements
are set out in proposed Schedule 7B (item 15).
Proposed clause 1 defines the fairness
test, the pre-transition Act and pre-transition
Proposed clause 2
provides that the fairness test and a number of other provisions
apply to pre-transition collective agreements. Variations to
collective agreements made after commencement of the schedule would
be subject to the new NDT.
Part 3 of Schedule 1 would make amendments
consequential on the main amendments and transitional amendments in
Parts 1 and 2.
Several items would repeal the definitions of Australian
workplace agreement or AWA . These are consequential on the
proposed abolition of AWAs. Numerous items propose to remove the
term AWA and replace it with the term ITEA . Items
19 and 20 add new definitions of an ITEA
and a workplace agreement to section 4 of the Act. A workplace
agreement means an ITEA, or a collective agreement, and also
includes a document that a Court has ordered under section 412A to
have effect as a workplace agreement.
Part 3 also proposes amendments consequential on the replacement
of the fairness test with no-disadvantage test .
Many of the proposed amendments in Part 3 relate to the
transmission of industrial instruments that apply to employers and
employees following the sale or restructure of the business.
The Work Choices amendments of 2005 enacted new transmission of
business rules in a new Part 11, the stated object of the Part
being to provide for the transfer of employer obligations under
certain instruments when the whole, or a part, of a person s
business is transmitted to another person . The Work Choices
reforms maintain some protection for employees following a sale or
restructure for the business they work in, but arguably with
significant limitations, compared with the old provisions. First, only employees
who were engaged by the former business owners benefit from a
continuation of award or workplace agreement conditions, and only
if they continue to be engaged in the same kind of employment with
the new employer. Most importantly, the new owner will not be bound
by the transmitted award or agreement in respect of any newly
appointed employees. Second, the award or agreement binds the new
employer for a maximum period of only 12 months.
The Bill does not alter these essential rules relating to
transmission of business but amends the provisions to the extent
necessary to comply with the new arrangements relating to the
abolition of AWAs and introduction of ITEAs, and the replacement of
the fairness test with the NDT.
For example, items 113 to 116
propose amendments to section 583 so that where immediately before
the time of transmission, the old employer and employee were bound
by an ITEA, and the employee is a transferring employee, the new
employer becomes bound by the ITEA.
Item 117 provides that a transferring employee
is to be treated as an existing employee for the purposes of
eligibility to make an ITEA with the new employer. The purpose and
effect is that a transferring employee may only make an ITEA with a
new employer that commences operation on approval (not on
Item 118 proposes to amend subsection 583(2) to
replace AWA with ITEA . The effect is to establish the period that
a new employer is bound by a transmitted ITEA. Essentially the same
rules would apply to ITEAs as apply to existing AWAs.
Item 119 would repeal and replace section 584
with the effect that an ITEA cannot be unilaterally terminated
during the transmission period, even if the ITEA has passed its
nominal expiry date.
Item 128 would insert into Part 11 a
proposed Division 7A Application of
no-disadvantage test. Its proposed sections 601A
to 601H deal with the situation where a workplace
agreement (ie usually an ITEA or a collective agreement) becomes
binding on a new employer and a transferring employee before the
Workplace Authority has applied the no-disadvantage test to the
agreement. The Division applies only to a workplace agreement that
operates from lodgement. Proposed section 601D
sets out the employment arrangements that would apply should a
workplace agreement cease to operate because it does not pass the
The WR Act includes a number of Schedules relating to
transitional arrangements for various industrial instruments
following the 2005 Work Choices amendments. Part 3 of Schedule 1 of
the Bill proposes amendments to several of these Schedules
consequential to the amendments proposed in Parts 1 and 2.
For example items 238 259 propose amendments to
Schedule 9. This is the Schedule containing the rules for the
transmission of pre-Work Choices industrial instruments of all
types. Item 244 amends the definition of a
transitional instrument in clause 3 to add an AWA. Similarly,
item 245 amends the definition of workplace
agreement to add an AWA. Item 246 is one of the more
significant amendments. It proposes a new Part 2A
to deal with the transfer of an AWA to a new employer on
transmission of business. It is consequential on the amendments
which would prevent the making of new AWAs and proposes similar
rules to the transmission of business rules in Part 11 of the Act.
Where immediately before the time of transmission, the old employer
and an employee were bound by an AWA, and the employee is a
transferring employee in relation to the AWA, the new employer
becomes bound by the AWA (proposed clause 6B).
Proposed subclause 6B(2) would specify how long
the new employer is bound to the AWA and the circumstances when the
AWA would cease to operate.
Item 248 would repeal clause 8 of Schedule 9.
The effect is that a transferring employee may become bound by a
transitional instrument that binds the new employer, in cases where
the AWA no longer applies to the employee.
Item 259 repeals Parts 8 and 9 of Schedule 9.
The repeal of Part 8 would have the effect that a transferring
employee may become bound by a transitional instrument that binds
the new employer, in cases where a transmitted collective agreement
or award no longer applied to the employee. Part 9 is a regulation
making power and its repeal is consistent with the repeal of Part
The Work Choices amendments have had a massive impact on
Australia s state and federal award system. Where state award
employers fall under the definition of a federal employer as
stipulated in the amended WR Act at section 6, the state award
transfers to the federal jurisdiction. In practical terms, what
used to be about 2,000 awards (called pre-reform awards) in the
federal jurisdiction has doubled to about 4,300, following the
inclusion of state awards, although these state awards are
scheduled to terminate on 27 March 2009. Also, there are
approximately 1500 transitional awards which were to have a life of
The Award modernisation program in the Bill would replace the
Work Choices Award Simplification and Rationalisation program, but
both programs aim to rationalise the award structure.
Items 2 to 4 insert into Subsection 4(1) the
definitions of: award modernisation process, award
modernisation request and modern award.
Item 6 repeals the 30 June 2008 limit on award
superannuation for those award employees who have an entitlement to
Item 9 is the key provision. It inserts
proposed Part 10A Award Modernisation into the WR
Act. Part 10A sets out the Australian Industrial
Relations Commission s (AIRC) award modernisation function and
specifies certain requirements for modern awards.
Proposed section 576A sets out the objects of
Part 10A which include the requirements that awards must be simple
and easy to understand and must reduce the regulatory burden on
business; must provide a fair minimum safety net of enforceable
terms (together with legislated standards); must be economically
sustainable and promote flexible work practices; must be in a form
which promotes collective enterprise bargaining and must result in
a stable and sustainable modern award system for Australia.
Proposed section 576B sets out the award
modernisation functions of the AIRC. The AIRC is to give regard
- promoting the creation of jobs
- high levels of productivity
- low inflation
- high levels of employment and labour force participation
- national and international competitiveness
- the development of skills and a fair labour market
- protecting the position in the labour market of young
- employees with a disability and employees to whom training
- the needs of the low-paid
- the desirability of reducing the number of awards operating in
the workplace relations system
- the need to help prevent and eliminate discrimination on the
grounds of race, colour, sex, sexual preference, age, physical or
mental disability, marital status, family responsibilities,
pregnancy, religion, political opinion, national extraction or
social origin, and to promote the principle of equal remuneration
for work of equal value
- the need to assist employees to balance their work and family
responsibilities effectively, and to improve retention and
participation of employees in the workforce
- the safety, health and welfare of employees
- relevant rates of pay in Australian Pay and Classification
Scales and transitional awards
- minimum wage decisions of the Australian Fair Pay Commission,
- the representation rights of organisations and transitionally
Proposed section 576C stipulates that the award
modernisation process must be carried out in accordance with a
written request (an award modernisation
request) made to the AIRC President by the Minister.
An award modernisation request must specify the award modernisation
process that is to be carried out; the time by which the award
modernisation process must be completed, which must not be
later than two years after the making of the request; and any other
matter relating to the award modernisation process that the
Minister considers appropriate. The request can also be revoked or
Proposed subsection 576C(3) in essence gives
the Workplace Relations Minister control over award modernisation.
It allows an award modernisation request to require the Commission
to prepare progress reports on specified matters relating to the
award modernisation process and allows two years to undertake award
modernisation; specify additional matters about which terms may be
included in modern awards; require the Commission to include in a
modern award terms about particular matters; and give directions
about how, or whether, the Commission is to deal with particular
matters about which terms may be included in a modern award.
It is these provisions which could be used to exclude an
employee above a certain salary from the award when s/he makes an
employment agreement. The Bill's
Explanatory Memorandum mentions this proposed exclusion in
the following terms:
As part of the award modernisation process all
awards will contain a flexibility section enabling arrangements to
meet the genuine individual needs of employers and employees. In
addition, employees earning above $100,000 per annum will be free
to agree their own pay and conditions without reference to awards.
This will provide greater flexibility for common law agreements
which have previously been required to comply with all award
provisions, no matter how highly paid the employee. These measures
respond to the views of employers and employees about who needs the
protection of the award system. (p. 8)
It appears that proposed section 576C will facilitate the
above policy but it requires this Bill to be passed and operational
to effect any such exclusion.
Proposed Section 576D requires that an award
modernisation request be published by the Australian Industrial
Proposed section 576E requires the AIRC
President to establish a full bench of the AIRC to carry out the
request and authorises the Presidentto give directions and allocate
tasks. Subject to these directions the full bench shall have
discretion in carrying out award modernisation and may consult with
persons and organisations.
Proposed section 576G directs a full bench of
the AIRC to make one or more modern awards consistent with the
Minister s request and not make an award other than in accordance
with the award modernisation process. It stipulates that a modern
award is not a legislative instrument.
Matters that may be dealt with by modern
Proposed section 576J sets out the new
allowable matters to be contained in awards. These are itemised
under subsection 576J(1). They are:
wages (including wage rates for junior employees,
employees with a disability and employees to whom training
arrangements apply), and skill-based classifications and career
structures and incentive-based payments, piece rates and
b) type of
employment, such as full-time employment, casual
employment, regular part-time employment and shift work and the
facilitation of flexible working arrangements particularly for
employees with family responsibilities
arrangements for when work is performed, including
hours of work, rostering, notice periods, rest breaks and
variations to working hours
rates, including for employees working unsocial, irregular
or unpredictable hours; employees working on weekends or public
holidays and shift workers
annualised wage or salary arrangements that have
regard to the patterns of work in an occupation, industry or
enterprise and provide an alternative to the separate payment of
wages or salaries, and other monetary entitlements and include
appropriate safeguards to ensure that individual employees are not
allowances, including expenses incurred in the
course of employment, responsibilities or skills that are not taken
into account in rates of pay and disabilities associated with the
performance of particular tasks or work in particular conditions or
leave, leave loadings and arrangements for taking
consultation, representation and dispute
A modern award may include terms about any other matter
specified in an award modernisation request.
Proposed section 576K allows an award to
include terms about outworkers conditions of employment.
Proposed section 576L limits award terms to
providing a fair safety net.
Proposed section 576M allows awards to include
terms incidental to a permitted term if they are essential to
making a term work in a practical way and to include machinery
terms about commencement, definitions, employers, employees and
organisations and so on.
Proposed section 576N emphasises that awards
must include terms prescribed by the Minister s request and
otherwise be consistent with that request.
Proposed section 576P stipulates that awards
must not contain terms other than those permitted under Subdivision
A (proposed sections 576J 576N).
Proposed section 576Q would provide that award
must not contain terms that would contravene the Freedom of
Association provisions (Part 16) of the Act.
Proposed section 576R prevents award terms to
do with right of entry to the workplace. Awards must not contain
terms that would allow union and employer organisation officers to
enter workplaces covered by the award so as to conduct inspections,
inspect work and documents and interview employees.
Proposed section 576S prevents awards from
containing discriminatory terms other than where these provisions
are required for inherent requirements of the job or to accord with
religious creeds for their teaching staff. Certain wage rate for
specified classes of employee (eg juniors) are not to be taken as
Proposed section 576T prevents awards from
containing provisions determined by reference to State or Territory
boundaries after five years from the commencement of the award.
Thereafter those terms cease to have effect.
Proposed section 576V states that a modern
award binds those employers, employees, organisation and eligible
entities it expresses to bind in accordance with its terms. These
exclude employers who are bound by enterprise awards.
Subsection 576V(5) allows a modern award to bind
entities and employers which employ outworkers.
576W would set out specific formal requirements for the
making of modern awards and orders varying modern awards such as
being signed by the President of the AIRC, along with other
requirements. There are also provisions setting out rules of
commencement of the award. Inter alia these require that when the
AIRC makes an award or order, the Registrar is to make public that
award or order (Proposed section 576Z).
Award rationalisation and simplification is currently provided
under Part 10 Division 4 of the WR Act (sections 534-551).
Item 26 of the Bill s Schedule 2 repeals these
provisions in their entirety. Other amendments are also made
pursuant to the repeal of Part 10 Division 4.
A model award modernisation request, incorporated into the
Explanatory Memorandum, is attached to this digest as an
appendix. The model award modernisation request suggests that scope
may be given to the AIRC to mould the proposed national employment
standards to industry circumstances via award modernisation. The
proposed National Employment Standards (NES) in effect expand on,
but are different to, the current Australian Fair Pay and
Conditions Standard. The NES will comprise:
- hours of work
- parental leave
- flexible work for parents
- annual leave
- personal, carers and compassionate leave
- community service leave
- public holidays
- information in the workplace
- notice of termination and redundancy; and
- long service leave.
The NES have been released for public consultation along with
the tabling of this Bill. Refer to the NES
It might be noted that under the current WR Act, the Minister
was accorded the function of triggering an award rationalisation
request (subsection 534(2)) however such a request was not made by
the previous Coalition Government. However, the previous government
did commission an award review by a taskforce chaired by the AIRC s
Deputy President O Callaghan. One concern raised by the Taskforce has been
answered in the model award modernisation request. The Taskforce s
concern went to the scope of award coverage. The Coalition
Government s response to the Taskforce indicated that it preferred
award-free employees to remain so. However Minister Gillard s model
award modernisation request mentions, inter alia, that:
The creation of modern awards is not intended to
extend award coverage beyond those classes of employees, such as
managerial employees, who, because of the nature or seniority of
their role, have traditionally been award free. This does not
preclude the extension of modern award coverage to new industries
or new occupations where the work performed by employees in those
industries or occupations is of a similar nature to work that has
historically been regulated by awards (including State awards) in
amendments proposed by this Schedule would amend Parts 2 and 7 of
the WR Act to
confine the functions of the AFPC to:
- undertaking annual minimum wage reviews
- adjusting wage rates in existing Australian Pay and
Classification Scales as a result of those reviews, and
- adjusting the APCS Federal Minimum Wage (FMW) or a special
Other functions performed by the AFPC such as setting special
FMW for junior employees and trainees, are repealed. The Schedule
retains key provisions enabling the AFPC to carry out its new
prescribed functions, such as the current section 196 allowing the
AFPC to adjust the FMW.
Item 1 of this Schedule would repeal Division
3A of Part 5 of the WR Act which obliges employers to provide their
employees with a Fact Sheet outlining certain aspects of their
Item 1 inserts proposed section
2A into Schedule 7. Schedule 7 of the WR
Act currently prescribes transitional arrangements for existing
pre-reform federal agreements. Proposed section 2A
will allow the AIRC to extend pre-reform certified agreements
beyond their nominal expiry date and/or vary their terms of
agreement, on application by any person bound by the agreement. Any
variation will be conditional on all parties consenting to the
variation and no industrial action has been entered into or
contemplated. In addition, the variation must not disadvantage the
employees in their overall terms of employment under any relevant
transitional award or any relevant law. The AIRC cannot extend the
agreement for more than three years.
Item 1 extends the cessation date of notional
agreements preserving State awards (NAPSAs) from 27 March 2009 to
31 December 2009 or a later date as prescribed in regulations.
Item 1 extends the registration of
transitionally registered organisations from 27 March 2009 to 31
December 2009 or a later date as prescribed by regulations.
Commission to undertake award modernisation
Pursuant to section 576C of the Workplace Relations Act 1996
(the Act), I, Julia Gillard,
Minister for Employment and Workplace Relations, request that
the Australian Industrial
Relations Commission (the Commission) undertake the task of
creating modern awards in
accordance with the following request.
This award modernisation request is to be read in conjunction
with Part 10A of the Act.
aim of the award modernisation process is to create a comprehensive
set of modern
awards. As set out in section 576A of the Act, modern
(a) must be simple to understand and easy to
apply, and must reduce the regulatory burden on business; and
(b) together with any legislated employment standards,
must provide a fair minimum safety net of enforceable terms and
conditions of employment for employees; and
(c) must be economically sustainable and promote
flexible modern work practices and the efficient and productive
performance of work; and
(d) must be in a form that is appropriate for a fair
and productive workplace relations system that promotes collective
enterprise bargaining but does not provide for statutory individual
employment agreements; and
(e) must result in a certain, stable and
sustainable modern award system for Australia.
2. The creation of modern awards is not intended to:
(a) extend award
coverage beyond those classes of employees, such as managerial
employees, who, because of the nature or seniority of their role,
have traditionally been award free. This does not preclude the
extension of modern award coverage to new industries or new
occupations where the work performed by employees in those
industries or occupations is of a similar nature to work that has
historically been regulated by awards (including State awards) in
(b) result in high-income employees being covered
by modern awards;
(c) disadvantage employees;
(d) increase costs for employers;
(e) result in the modification of enterprise
awards. This does not preclude the creation of a modern award for
an industry or occupation in which enterprise awards operate.
However section 576V of the Act provides that a modern award is
to be expressed not to bind an employer who is bound by an
enterprise award in respect of an employee to whom the enterprise
Performance of functions by the Commission
3. In accordance with section 576B of the Act, the Commission
must have regard to the following factors when performing its
functions under Part 10A of the Act and this award modernisation
(a) the creation of jobs and the promotion of
high levels of productivity, low inflation, high levels of
employment and labour force participation, national and
international competitiveness, the development of skills and a fair
(b) protecting the position in the labour market of
young people, employees to whom training arrangements apply and
employees with a disability;
(c) the needs of the low paid;
(d) the desirability of reducing the number of awards
operating in the workplace relations system;
(e) the need to help prevent and eliminate
discrimination on the grounds of race, colour, sex, sexual
preference, age, physical or mental disability, marital status,
family responsibilities, pregnancy, religion, political opinion,
national extraction or social origin and to promote the principle
of equal remuneration for work of equal value;
(f) the need to assist employees to balance
their work and family responsibilities effectively and to improve
retention and participation of employees in the workforce;
(g) the safety, health and welfare of
(h) relevant rates of pay in Australian Pay &
Classification Scales and transitional awards;
(i) minimum wage decisions of the
Australian Fair Pay Commission; and
(j) the representation rights, under the
Act or the Registration and Accountability of Organisations
Schedule, of organisations and transitionally registered
Award modernisation process
4. When modernising awards, the
Commission is to create modern awards primarily along industry
lines, but may also create modern awards along operational lines as
it considers appropriate. In creating modern awards, and as
indicated at paragraph 3(d) above, the Commission must have regard
to the desirability of reducing the number of awards operating in
the workplace relations system.
5. Division 3 of Part 10A of the Act
deals with the terms of modern awards, including the provisions
that may be included and must not be included in modern awards.
Subject to paragraphs 29-35 below, modern awards may also include
provisions relating to the proposed National Employment Standards
6. As soon as practicable after
receiving this award modernisation request, the President will
consult with the major employer and employee representative bodies
on the best process to be followed by the Commission when creating
modern awards. The President will then release a clear program and
timetable for completing the award modernisation process.
7. Individual Commission members may
be directed by the President in the award modernisation
8. The Commission will identify the
type of work, industry and/or occupations covered by a modern award
and the application of each award.
9. The Commission is to have regard
to the desirability of avoiding the overlap of awards and
minimising the number of awards that may apply to a particular
employee or employer. Where there is any overlap or potential
overlap in the coverage of modern awards, the Commission will as
far as possible include clear rules that identify which award
10. The Commission will prepare a
model flexibility clause to enable an employer and an individual
employee to agree on arrangements to meet the genuine individual
needs of the employer and the employee. The Commission must ensure
that the flexibility clause cannot be used to disadvantage the
11. Each modern award will include
the model flexibility clause with such adaptation as is required
for the modern award in which it is included.
12. The Commission may include
transitional arrangements in modern awards to ensure the Commission
complies with the objects and principles of award modernisation set
out in this award modernisation request.
13. The President will consult with
the Australian Fair Pay Commission and State industrial tribunals
14. The Commission will prepare an
exposure draft of each modernised award. The Commission will, as
appropriate, hold a conference or conferences with major employer
and employee representative bodies for the purpose of informing the
preparation of each exposure draft.
15. The Commission is to publish
exposure drafts of each modernised award for the purpose of further
consultation and to ensure that all stakeholders and interested
parties have a reasonable opportunity to comment upon the exposure
drafts. In so far as practicable, the exposure drafts will be
electronically published for comment.
16. Consultation on exposure drafts
of modern awards will be open and transparent.
Creating modern awards
17. Upon completion of the
consultation processes in relation to an exposure draft, the
Commission will prepare the modern award.
President may establish one or more Full Benches for the purpose of
creating modern awards. Each modern award is to be created by a
19. The Commission is to complete
the award modernisation process by 31 December 2009.
20. To that end, the Commission
should endeavour by 30 June 2008 to have identified a list of
priority industries or occupations for award modernisation,
developed a timetable for completing the award modernisation
process and developed a proposed model award flexibility clause. In
developing its priority list, the Commission will have regard to
those industries and occupations with high numbers of Australian
Workplace Agreements and Notional Agreements Preserving State
21. In identifying a list of
priority industries or occupations for award modernisation,
developing a timetable for completing the award modernisation
process and developing a proposed model award flexibility clause,
the Commission is to consult with major workplace relations
stakeholders and other interested parties. It is acknowledged that
the Commission will require the full support and cooperation of
major workplace relations stakeholders and other interested parties
in order to conduct that consultation.
22. In developing a timeframe for
completing the award modernisation process, the Commission should
endeavour to have created by the end of December 2008 modern awards
for each of the priority industries or occupations it has
identified following the consultations with key workplace relations
Reporting on the progress of award
The President is to publish a quarterly report outlining:
those industries or occupations undergoing or about to commence
award modernisation, including the Commission member responsible,
under the auspices of the Full Bench, for those industries and/or
the progress of award modernisation, including any significant
developments during the quarter, key issues or developments
scheduled for the next quarter and any adjustments made to the
timetable determined by the President for the award modernisation
any other matters which the President considers appropriate.
first quarterly report should relate to the June quarter 2008.
Interaction with the proposed National Employment
25. The proposed NES consist of 10
legislated minimum conditions of employment for all
employees covered by the federal
system. The proposed NES will establish a simple legislative
framework of minimum entitlements with straightforward application
or machinery rules that are essential to the operation of each
entitlement. The proposed NES will operate in conjunction with a
relevant modern award to provide a fair safety net of minimum
entitlements for award covered employees.
26. The proposed NES will be
finalised prior to 30 June 2008 and provided to the Commission for
the purpose of conducting the award modernisation process.
27. A modern award may cross
reference a provision of the proposed NES. A modern award may
replicate a provision of the proposed NES only where the Commission
considers this essential for the effective operation of the
particular modern award provision. Where a modern award replicates
a provision of the proposed NES, NES entitlements will be
enforceable only as NES entitlements and not as provisions of the
28. A modern award cannot exclude a
term of the proposed NES or operate inconsistently with a term of
the proposed NES.
Subject to paragraph 32 below, a modern award may include
industry-specific detail about matters in the proposed NES.
30. Subject to paragraph 32 below, a
modern award may build on entitlements in the proposed NES where
the Commission considers it necessary to do so to ensure the
maintenance of a fair minimum safety net for employees covered by
the modern award, having regard to existing award entitlements for
31. In creating a modern award, the
Commission is to assess whether additional machinery rules in
relation to NES entitlements are necessary for the applicable
industry or occupation. An example of a machinery provision could
be rules about taking double the period of annual leave on half
32. In relation to long service
leave, the Australian Government will, in co-operation with state
governments, develop a national long service leave entitlement
under the NES. In doing so, the Australian Government will also
consult with major employer and employee representative bodies.
Until then, long service leave entitlements derived from various
sources will be protected. So as to not pre-empt the development of
a nationally consistent approach, the Commission must not include a
provision of any kind in a modern award that deals with long
33. Other than expressly authorised
under this request (see paragraphs 29-31), the Commission must not
include a term in a modern award on the basis that it would be an
allowable modern award matter where the substance of the matter is
dealt with under the proposed NES.
Shift workers and piece
34. The proposed NES apply to shift
workers and provide that a shift worker is entitled to an
additional week of annual leave that is, five weeks of annual leave
for each year of completed service.
35. The proposed NES rely on a
modern award to define, where required, a shift worker as
appropriate for the particular industry covered by the award.
36. In modernising awards, the
Commission must have regard to whether it is appropriate to include
a definition of shift worker in a modern award that applies to
these types of employees for the purposes of the proposed NES
annual leave entitlements.
37. The proposed NES apply to a
38. The proposed NES rely on modern
awards to define a piece worker and set out rules relating to the
payment of NES entitlements (based on ordinary hours of work) for a
39. In modernising awards, the
Commission must have regard to whether it is appropriate to
definition of piece worker in a modern award that applies to these
employees (if an employee is employed on the basis of hours worked,
it is not expected that such employees would be defined as piece
provision that would provide a calculation of payment, a payment
rate, or a payment rule in relation to a piece worker employee with
respect to paid leave orpaid absence under the proposed NES. For
example, a method for making payment to a piece worker employee
when that employee is absent on annual leave.
Ordinary hours of work
40. Many entitlements in the
proposed NES rely on modern awards to set out ordinary hours of
work on a weekly or daily basis for an employee covered by the
modern award. The Commission is to ensure that it specifies in each
modern award the ordinary hours of work for each classification of
employee covered by the modern award for the purpose of calculating
entitlements in the proposed NES.
41. In accordance with section 576J
of the Act, minimum wages are a matter that may be dealt with in
modern awards. In dealing with minimum wages in modern awards, the
Commission is to have regard to the desire for modern awards to
provide a comprehensive range of fair minimum wages for all
employees including, where appropriate, junior employees, employees
to whom training arrangements apply and employees with a disability
in order to assist in the promotion of employment opportunities for
. The Hon Julia
Gillard, Minister for Employment and Workplace Relations, Second
reading speech: Workplace Relations Amendment (Transition to
Forward with Fairness) Bill 2008 , House of Representatives, 13
February 2008, p. 8.
. New high in IR consultation under Labor ,
Workforce, Issue 1621, 15 February 2008.
. Steve O Neill and Mary Anne Neilsen, Workplace
Relations Amendment (A Stronger Safety Net) Bill 2007, Bills
Digest, no. 181, Parliamentary Library, Canberra, 2006-07.
Steve O Neill
Mary Anne Neilsen
8 March 2008
Bills Digest Service
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