Workplace Matters Update - Phase one of labour reforms introduced - An end to the making of AWAs

Today the Federal government took its first step to reform Australia's industrial relations laws by tabling the Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 (Bill).

The fate of this Bill rests with the position the Opposition takes in the Senate which it continues to control until 1 July 2008. The Bill may not be passed before 1 July 2008 and even after this date the Government would have to negotiate its passage with the Greens, Family First and Senator-elect Nick Xenophon.

The Opposition's stance on the Bill is not yet clear but their spokesperson for Workplace Relations, Julie Bishop MP has previously indicated that she supports the retention of AWAs which were first introduced into the federal industrial landscape on 12 March 1997. The Opposition has notified the Senate that it will refer the Bill to a Senate inquiry, with a reporting date of Monday, 28 April 2008.

Key changes

The Bill, if passed:

• Ends the making of new Australian Workplace Agreements (AWAs).
• Allows existing AWAs to run their full-term but no later than 31 December 2012.
• Allows for Interim Transitional Employment Agreements (ITEAs) during the period up to 31 December 2009.
• Only allows businesses using AWAs as at 1 December 2007, to enter into ITEAs.
• Sets out a new 'no-disadvantage test' to apply to ITEAs and collective agreements.
• Directs the Australian Industrial Relations Commission (AIRC) to undertake the award modernisation process.
• Removes the previous Government's Fact Sheet requirements on employers.

Abolition of AWAs

The Bill removes the ability of Australian employers to enter into AWAs. Those AWAs that have been lawfully made will be allowed to run their course.

Further, employers who had AWAs in their businesses as at 1 December 2007, will be permitted to continue to make individual statutory agreements known as ITEAs. These individual statutory agreements will continue to have priority in the scheme of industrial instruments but will be subject to a new 'no-disadvantage test' and have a duration only until 31 December 2009.

A new no disadvantage test

ITEAs will be subject to a no-disadvantage test under which ITEAs must not disadvantage employees against an applicable collective agreement and the current Australian Fair Pay and Conditions Standard (AFPCS), or, in the absence of an agreement, the current AFPCS and the relevant award.

Application to collective agreements

Further, collective agreements are also required to pass a no-disadvantage test in that they must not disadvantage employees compared with the current AFPCS and the relevant award.

Sections 354 (protected award conditions), 355 (restrictions on the incorporation of terms from other instruments into workplace agreements) and 399 (prevention on award or previous agreement applying once an agreement is terminated), will all be repealed.

Award modernisation

As discussed in our December special report, the AIRC will have the task of modernising and simplifying awards. It is proposed that awards will supplement the legislated safety net by including 10 national employment standards in each award. The Opposition is on the record as supporting this reform.

The Howard Government also sought to 'rationalise' existing federal awards, intending to reduce awards in number.  On 27 October 2005, the Award Review Taskforce (the Taskforce) was established to make recommendations on how awards should be rationalised to achieve greater simplicity and consistency in awards.  The Taskforce recommended a 'staged approach' and discussed a number of possible models, however it did not recommend a model for implementing the rationalisation.  The Taskforce's ambitious goal was to reduce the number of federal awards from over 4000 to under 100.

The Government has previously indicated that the AIRC will be given the task of modernising awards by 31 December 2009.

The award modernisation request, which will start the process, can only formally be made once the Bill becomes law.  In the draft request (provided with the Explanatory Memorandum) the Minister requests the AIRC to create modern awards primarily along industry lines.  We may end up with a number of industry-based or occupation- based awards that apply to employers that operate in that industry together with their employees, or to employees who perform a particular type of work.  The AIRC may also make modern awards that apply to named employers and their employees.

Modern awards will not operate until after 1 January 2010.

Introduction of the 10 national Employment Standards

The 10-condition National Employment Standards safety net was originally to be in the Bill, but will now be released in a separate exposure draft. The Government planned to seek comments on the exposure draft by April, with a view to settling the content by June.

What happens next

The Bill is now subject to the position the Opposition takes to it. The first step is that the Bill will be sent to a Senate Inquiry to consider among other things the economic impact of the abolition of AWAs. The Opposition has also indicated that it will formulate its position once it has considered the detail of the Bill. At this time it appears that the Bill is unlikely to pass before Easter and may ultimately not be passed before 1 July 2008.

In this environment of change we encourage you to consider the impact of the reform agenda:

• On your workplace and people strategies.
• On your organisation's existing employment arrangements.
• When making new workplace agreements.
• When implementing workplace change and restructuring.

For further information please contact:

John Tuck, Partner
Tel +61 3 9274 5051
john.tuck@dlaphillipsfox.com

Nick Ruskin, Partner and National Practice Leader
Tel +61 3 9274 5284
nick.ruskin@dlaphillipsfox.com