Australian Workplace Agreements (AWAs) and WorkChoices


Australian Workplace Agreements (AWAs) and WorkChoices

With the number of recent media stories dealing with Australian Workplace Agreements (AWAs), it's time to have a more detailed look at this industrial instrument, and some of the advantages and disadvantages that may apply to the implementation of AWAs.


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With the number of recent media stories dealing with Australian Workplace Agreements (AWAs), it's time to have a more detailed look at this industrial instrument, and some of the advantages and disadvantages that may apply to the implementation of AWAs.

It should be noted that AWAs were not introduced by the WorkChoices legislation but have existed under current federal legislation for approximately 10 years, although the rate of uptake by employers in the private sector over this period has not been high. The provisions under WorkChoices that apply to the negotiation of an AWA are equally applicable to the negotiation of a collective agreement.

This article considers the advantages (from an employer's perspective) of negotiating AWAs and the consequences of terminating an AWA in the future.

Pre-reform AWAs continue

An employee who was working under a pre-reform AWA prior to the introduction of WorkChoices will continue to receive the conditions and entitlements that were negotiated in that agreement. A pre-reform AWA will continue to operate even after the nominal expiry date unless terminated or replaced by a new AWA.

The Australian Fair Pay and Conditions Standard (AFPCS) does not apply to a pre-reform AWA because previous AWAs were compared against the 'no disadvantage test'.

A pre-reform AWA may be terminated by using the termination provisions which applied prior to WorkChoices. If a pre-reform AWA is terminated but not replaced by a new AWA (or any other type of workplace agreement), an employee's entitlements will be sourced from:

  • any applicable certified agreement or collective agreement; or
  • an applicable award.

Changes from pre-reform system

Under WorkChoices, an AWA now applies from the date of lodgement with the Office of the Employment Advocate (OEA).

Probably the most important change was the removal of the 'no disadvantage test', ie the comparison of the conditions of an AWA to the minimum conditions of the applicable/relevant state or federal award.

Comparison to Standard

The comparison is now to the AFPCS and other provisions contained in the Workplace Relations Act.

All relevant entitlements to be included

Another amendment means it is no longer possible for an AWA to contain, say, one specific provision, eg cashing out annual leave or long service leave. It is now a requirement that an AWA contains all the relevant employment conditions and entitlements applicable to the employee.

Another change is the employee negotiating the AWA can appoint a bargaining agent to negotiate on his or her behalf.

AWAs and Australian Fair Pay and Conditions Standard (AFPCS)

Whilst the 'no disadvantage test' is no longer applicable when registering an AWA under WorkChoices, certain conditions within an AWA must be at least equal to the minimum entitlements prescribed by the Workplace Relations Act (WRAct) to be valid.

These minimum conditions include the provisions under the AFPCS and a number of other minimum conditions prescribed by the WRAct - namely:

  • Adult minimum wage - the rate of pay prescribed for the current relevant award classification will continue to be the legal minimum rate of pay, including those employees whose minimum rate of pay was previously determined by a pre-reform certified agreement, pre-reform AWA or a preserved state agreement. A standard federal minimum wage of $12.75 per hour will apply to adult employees not covered by a pre-reform industrial instrument.
  • Hours of work - a person cannot be directed to work more than 38 ordinary hours per week, plus reasonable additional hours. An AWA may allow for the employer and employee to agree in writing that the employee's hours of work are to be averaged over a period of not more than 12 months.
  • Casual loading - a minimum default casual loading of 20 per cent now applies to any casual employee employed under an AWA negotiated under WorkChoices, regardless of the casual loading under the relevant pre-reform award, NAPSA or pre-reform agreement.
  • Annual leave - the equivalent of four weeks' paid leave per year for a full-time (38 hour week) employee. A full-time or part-time employee (excluding casuals) accrues 1/13th of the 'nominal hours' he or she has worked in a four week period and the accrued entitlement must be credited at least monthly. A seven-day continuous shift worker regularly required to work on Sundays and public holidays also accrues the equivalent of an additional week's leave each year for a full-time (38 hour week) employee. Ordinary pay need only include the employee's base rate of pay.
  • Cashing-out annual leave - under the pre-WorkChoices system, this was a common reason for an employee to approach their employer about negotiating an AWA . The previous system did not restrict the amount of accrued annual leave that an employee could cash out. This is no longer possible, with WorkChoices limiting the amount of annual leave which may be cashed out up to the equivalent of two weeks from the previous year's accrual.
  • Personal/carer's leave - the Standard provides for 10 days paid personal/carer's leave (including compassionate leave) per year, with the accrual each year of any untaken balance of leave. Ordinary pay is what the employee would have received had they worked, say, shift penalties and rostered overtime. An AWA may allow the cashing out of personal/carer's leave, however the employee must have a balance of at least 10 days per year available. Only where the AWA prescribes more than 10 days personal/carer's leave per year can there be any cashing out of leave, and then only personal/carer's leave in excess of 10 days per year.
  • Parental leave - up to 52 weeks unpaid parental leave (including maternity, paternity and adoption leave) after 12 months continuous service with the employer.
  • Public holidays - an employee is entitled to a day off on a public holiday, and the employee may refuse a request to work on a holiday if the employee has reasonable grounds for doing so. A provision to the contrary in an AWA has no effect.
  • Meal breaks - WorkChoices contains a provision that an employer must not require an employee to work for more than 5 hours continuously without an unpaid interval of at least 30 minutes for a meal where no other agreement or industrial instrument applies.

Protected allowable award matters - impact on AWAs

Many employers presume that the provisions contained in a pre-reform federal award or NAPSA are no longer relevant when negotiating a new AWA. This is not necessarily correct, as certain award provisions are 'protected' when a new AWA is negotiated.

'Protected' award conditions can be bargained by the employer and employee, but they continue to apply unless varied or removed by specific provision in the new AWA. These conditions are:

  • rest breaks (including meal breaks);
  • incentive-based payments and bonuses;
  • annual leave loadings;
  • observance of public holidays or payment with respect to those days;
  • days to be substituted as public holidays;
  • monetary allowances for expenses incurred in the course of employment, responsibilities or skills that are taken into account in rates of pay for employees, or disabilities associated with the performance of work in particular conditions or locations;
  • loadings for overtime or shift work;
  • penalty rates; and
  • outworker provisions
Can be expressly excluded

Again, it should be noted that the parties to a new AWA can expressly exclude these entitlements, with no monetary compensation necessarily required to be provided by the employer. Apart from 'protected' conditions, awards do not apply to employees under an AWA.

Contents of an AWA - points to note

Nominal expiry date: An AWA must contain a 'nominal expiry date' which is a date specified in the agreement or, if not specified, the fifth anniversary of the date on which the AWA was lodged.

Dispute settlement procedure: An AWA must also include procedures for the settling of disputes. If an AWA does not include a dispute settlement procedure, the AWA is taken to include the model dispute resolution process prescribed in the WorkChoices legislation.

Calling up content: An AWA may incorporate terms from a workplace agreement or an award, provided the agreement or award was binding on the employer just before the AWA was made.

Prohibited content: The following terms are considered 'prohibited content' when negotiating an AWA:
  • deduction from wages, or the provision of a deduction facility, of trade union membership subscriptions or dues;
  • trade union training leave;
  • paid leave to attend trade union meetings;
  • requirements as to the renegotiation of an AWA;
  • providing an inalienable right to represent the employee;
  • right of entry of union or employer officials;
  • restrictions on the engagement of independent contractors;
  • restrictions on the engagement of labour hire workers;
  • the forgoing of annual leave credited to an employee otherwise than in accordance with the WRAct;
  • provision of information about the employee to a trade union unless authorised by law;
  • encouraging to or discouraging the employee from joining an industrial association;
  • a term allowing the employee to engage in or organise industrial action;
  • conferring a right to the employee in relation to a termination for a reason that is harsh, unjust or unreasonable;
  • discriminatory terms, eg. race, colour, sex, age, disability, marital status, religion, etc.;
  • matters that do not pertain to the employment relationship

Note on pre-reform instruments

It should be noted that a term of a pre-reform certified agreement, NAPSA, preserved state agreement or preserved individual state agreement, that restricts the ability of a person to offer, negotiate or enter into an AWA, is regarded as 'prohibited content' for the purposes of those industrial instruments.

Contracting outside the AFPCS not permitted

Whilst an AWA is designed to give the greatest flexibility to the parties when negotiating conditions of employment there are certain minimum conditions that must be provided in an AWA. An employer cannot enter into an AWA to deprive the employee of any benefit conferred on the employee by the AFPCS. It is also an offence for an employer to apply duress or pressure to an employee to force them to enter in to an AWA.

For example, an employee may wish to have inserted into an AWA a provision that allows the employee to cash out all of their annual leave or personal/carer's leave accruals, including leave accrued prior to WorkChoices. As WorkChoices does not allow cashing out, in the case of annual leave - more than 2 weeks per year or, in the case of personal/carer's leave, below the Standard of 10 days per year - these provisions would breach WorkChoices legislation as they provide for a condition less generous than the AFPCS.

Displacing state/territory laws

An AWA can displace certain state or territory employment laws. For example, long service leave legislation applies in all states and territories, however an AWA can expressly exclude an entitlement to long service leave, with no requirement for the employer to provide compensation for the withdrawal of the long service leave entitlement.

In reality, it may be difficult to obtain an existing employee's agreement to sign an AWA without some compensation for the loss of the long service leave entitlement, although this provision may be more prevalent when an AWA is offered to a new employee.

Some State/Territory laws prevail

An AWA, however, cannot displace other state or territory laws. For example, a state or territory law covering occupational health and safety or workers' compensation cannot be displaced by an AWA.

Terminating a new AWA

When a new AWA is terminated and not replaced by any other workplace agreement, the fall-back position regarding employment conditions is, in the case of wages - the wage for the relevant classification under the applicable award, and in the case of casual employees - the default 20 per cent casual loading; the AFPCS - with respect to those employment conditions relating to annual leave, hours of work, personal/carer's leave, and parental leave; and other minimum employment provisions prescribed in the WRAct, eg. notice of termination, public holidays, and meal breaks.


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