Overview of ITEAs and AWAS under Fair Work Act

Analysis

Overview of ITEAs and AWAS under Fair Work Act

Individual Transitional Employment Agreements (ITEAs) were agreements made by employers who had been using AWAs under the previous industrial workplace relations system. ITEAs are no longer available under the Fair Work Act. This article looks at the situation of employers with employees on ITEAs, and those who still have AWAs.

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Individual Transitional Employment Agreements (ITEAs) were agreements made by employers who had been using AWAs under the previous industrial workplace relations system. ITEAs are no longer available under the Fair Work Act 2009. This article looks at the situation of employers with employees on ITEAs, and those who still have AWAs.
 
[This article was prepared by Australian Business Lawyers — a law firm that specialises in workplace law, as well offering corporate and commercial law services.]
 
Impact of the Act
 
Despite the fact that no ITEA could have a nominal expiry date that is later than 31 December 2009, ITEAs still continue to operate until they are terminated. Employers should, however, be aware that under the Act, any terms in an ITEA that are less beneficial than the National Employment Standards have no effect to the extent that they are less beneficial, and the employee covered by the ITEA cannot be paid less than the relevant modern award base rate of pay.
 
Further, some AWAs under the previous workplace relations system could have a nominal expiry date that is later than 31 December 2009. Indeed, AWAs could have a nominal expiry date as late as April 2013. The following commentary applies equally to AWAs, except where noted below.
 
Terminating an ITEA or AWA
 
Some employers may wish to move employees off existing ITEAs or AWAs. To achieve this, the ITEA or AWA can be terminated. If the ITEA or AWA is terminated, a relevant modern award or enterprise agreement will start applying.
 
To terminate an ITEA, or an AWA that is within its nominal term, the employer needs to sign a written agreement with the employee to terminate the ITEA and apply to Fair Work Australia (FWA) for approval of the termination.
 
Alternatively, the following other termination options are available:
  • conditional termination
  • unilateral termination.
 
Conditional termination
 
You may wish to make the agreed termination of the ITEA or an AWA (regardless of whether the AWA is within or outside its nominal term) conditional on an enterprise agreement coming into operation. This could be useful, for example, as part of a strategy to have all employees covered by one agreement.
 
To make a conditional termination, employers need to draft a written conditional termination agreement, sign it, have the employee sign it, and have it witnessed. The signed conditional termination agreement is included with any application for approval of the enterprise agreement.
 
Unilateral termination
 
You can apply to have FWA terminate an ITEA or AWA (but only if the nominal term has expired) without the employee’s agreement. This option could be useful where the employee won’t provide consent.
 
To do this, you would need to write to the employee, naming the ITEA or AWA. The letter should then state that the employer intends to apply to FWA for approval of a termination of the ITEA or AWA, noting that the ITEA or AWA will terminate 90 days after FWA’s decision. Within 14 days of the letter to the employee, apply to FWA.
 
An employee can also apply to terminate the ITEA.
 
What other instruments — instead of an ITEA or AWA?
 
If an employee is not covered by an ITEA or AWA, or you have taken the necessary steps above to terminate the ITEA or AWA, the Act provides a number of mechanisms to formalise the employment relationship. The Act requires compliance with the National Employment Standards.
 
Enterprise Agreements and Individual Flexibility Arrangements
 
Enterprise Agreements (formerly known as ‘workplace’ or ‘collective’ agreements), can now be made between an employer and any number of employees. Where an employee who will be covered by the agreement is a member of a union, and that union is entitled to represent the employee’s industrial interests with respect to the type of work under the proposed agreement, the union will be an automatic bargaining representative of the employee. The employee may, however, elect someone else (including themselves) as their bargaining representative.
 
Because Enterprise Agreements may be made with an unrestricted number of employees at a workplace, parties have the option of utilising the mandatory ‘Flexibility Term’ to individualise the terms of the agreement between an employer and individual employee. This is called an Individual Flexibility Arrangement, and operates to vary the effect of certain terms of the enterprise agreement, such as hours of work or overtime. These written arrangements can be terminated at any time by agreement between the employer and individual employee, or by either party giving up to 28 days notice of the intention to terminate the arrangement.
 
Modern Awards
 
Modern Awards are the hallmark of the new industrial relations system, and may apply to your employees in the absence of an enterprise agreement, or an applicable AWA/ITEA.
 
Like enterprise agreements, all modern awards must include a flexibility term, which allows an employer and individual employee to enter an Individual Flexibility Arrangement. As Fair Work Australia has drafted the modern awards, all modern awards contain a ‘pro-forma’ flexibility term. However, these flexibility terms are quite broad, and allow employers and individual employees to vary the effect of a broad range of award terms.
 
Contracts of employment
 
The ease at which an individual flexibility arrangement can be terminated, means that employers must be mindful to always ensure an appropriate contract of employment governs the employee’s employment, regardless of an applicable enterprise agreement or modern award.
 
A contract of employment can be used in conjunction with an applicable enterprise agreement or modern award, providing that its terms and conditions are not inconsistent with the relevant industrial instruments.
 
Publication that can help
 
HR Advance (a sister publication to WorkplaceInfo) includes a number of template employment contracts and enterprise agreements that can be used after an employee's ITEA/AWA is terminated.
 
 
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