The fate of current industrial instruments — post January 2010

Analysis

The fate of current industrial instruments — post January 2010

As the end of the year approaches, employers and employees are focusing on issues surrounding the continuation or demise of existing awards, agreements and contracts of employment after 1 January 2010.

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As the end of the year approaches, employers and employees are focusing on issues surrounding the continuation or demise of existing awards, agreements and contracts of employment after 1 January 2010.
 
While the introduction of modern awards and the National Employment Standard (NES) from 1 January 2010 will affect the minimum conditions of employment for most workers in Australia, their introduction does not necessarily mean the demise of an existing industrial instrument.
 
A quick count of existing instruments amounts to approximately 12 different industrial instruments that could possibly apply to employees currently employed in the workplace.
 
Many inquiries to WorkplaceInfo have been about the status of these instruments from January 2010; and the circumstances under which instruments may continue to apply.
 
Another factor in play is that many employers may be keen to continue with existing arrangements under the relevant individual or collective agreement because these conditions may be mutually suitable to both the employer and employee(s) in the particular workplace.
 
Existing industrial instruments
 
The Fair Work (Transitional and Consequential Amendments) Act 2009 (TA Act)  identifies two broad categories of industrial instruments under the Workplace Relations Act that continue in existence under the Fair Work Act 2009 as ‘transitional instruments’ — ‘award-based transitional instruments’ and ‘agreement-based transitional instruments’.
 
However, the total number of transitional instruments under these two categories is substantial, as a consequence of the two previous workplace relations regimes that operated prior to, and after, WorkChoices.
 
The TA Act identifies the following specific industrial instruments as ‘transitional instruments’ recognised by the Fair Work Act:
  • an award (refers to a pre-reform federal award)
  • a notional agreement preserving state awards (NAPSA)
  • a transitional federal award
  • a State reference transitional award or common rule
  • a workplace agreement (includes a collective agreement or Individual Transitional Employment Agreement (ITEA))
  • a workplace determination
  • a preserved state agreement (includes a preserved individual state agreement)
  • an Australian Workplace Agreement (AWA)
  • a pre-reform certified agreement
  • a pre-reform AWA
  • an old IR agreement
  • a section 170MX award.
 
The most common industrial instruments currently existing in the workplace are federal awards, NAPSAs, collective agreements, individual agreements and common rule federal awards, and enterprise NAPSAs.
 
This article will examine the impact of the Fair Work Act on the continued operation of these industrial instruments.
 
Pre-reform federal awards
 
As mentioned previously, a pre-reform federal award is referred to by the TA Act as an ‘award-based transitional instrument’. This means the applicable federal award will continue to apply to employers and employees until 31 December 2009, when it is expected that an applicable modern award will then replace it.
 
However, transitional instruments from the Workplace Relations Act will continue to apply until replaced by a Fair Work Act instrument. This means that in the unlikely event that a modern award does not have coverage of employee(s) currently covered by a pre-reform federal award, the transitional instrument will continue to apply beyond 1 January 2010 until replaced by a Fair Work Act instrument.
 
Transitional federal awards
 
Transitional federal awards applied to an employer named as a respondent to a federal award who is not a corporation, such as a sole trader or a partnership. Because these employers were not incorporated, they could not be covered by the federal workplace relations system.
 
Under the Workplace Relations Act, these instruments were given a life span of five years after the commencement of WorkChoices, meaning employees under these instruments will revert to the relevant state workplace relations system from 27 March 2011.
 
Referral of state powers
 
However, if a particular state refers its industrial relations powers to the Commonwealth, these employees will be covered by the relevant modern award.
 
The State Governments of South Australia and Tasmania have already indicated their intention to refer these powers to the Commonwealth at some stage.
 
The Victorian Government had already referred its industrial relations powers to the Commonwealth some years ago.
 
In those states that do not refer their industrial relations powers, employees of an employer whose business is unincorporated will revert to the relevant state award from 27 March 2011.
 
NAPSAs
 
As with pre-reform federal awards, a NAPSA is an ‘award-based transitional instrument’ for the purposes of the ‘bridging period’ between 1 July and 31 December 2009.
 
From 1 January 2010, it is expected the relevant modern award will replace the current NAPSA, although a NAPSA may continue to apply to affected employees where no modern award has been given specific coverage of that industry or occupation at that time.
 
As every existing NAPSA has been included in the Australian Industrial Relations Commission’s — now Fair Work Australia (FWA) — award modernisation process, it is unlikely a NAPSA will continue to apply beyond 1 January 2010.
 
Enterprise NAPSAs
 
A number of employers with employees covered by an enterprise NAPSA are unsure of the continued operation of these instruments after 31 December 2009.
 
The answer is that they do continue to apply beyond this date. The current form of the amended request from the Minister provides at 2(e) that the creation of modern awards is ‘not to … result in the modification of enterprise awards or NAPSAs that are derived from state enterprise awards’.
 
This does not preclude the creation of a modern award for an industry or occupation in which enterprise awards or NAPSAs that are derived from state enterprise awards operate. However, a modern award should be expressed so as not to bind an employer who is bound by an enterprise award or a NAPSA derived from an enterprise award in respect of an employee to whom the enterprise award or NAPSA applies.
 
Modern awards are to be expressed so as to not apply to employers covered by an enterprise NAPSA (although the coverage clause may, in the absence of the enterprise NAPSA, cover the employees).
 
An enterprise NAPSA is potentially convertible into a modern award, which is done by application to FWA. A party can also apply to terminate the enterprise NAPSA.
 
If nothing is done, it ceases to operate on 31 December 2013. If, in the meantime, it is terminated on application, a modern enterprise award is made or FWA declines to convert it into an enterprise modern award on the rounds that there is an appropriate modern award, the enterprise NAPSA ceases then. (Refer to Div 1 Part 2, Sch 6 of the TA Act).
 
While it applies, the enterprise NAPSA forms the basis of the Better Off Overall Test (BOOT) (see Part 4 Sch 7 of the TA Act).
 
Agreements
 
There is no ‘sunset’ date for an existing collective or individual registered agreement.
 
A pre-Fair Work Act agreement will continue to remain in force unless terminated or replaced in the appropriate manner. A previous article has detailed the process provided under the Fair Work Act, of the variation, or the criteria for the termination or replacement, of an existing agreement.
 
However, it should be noted that the minimum wages and conditions of employment that will commence from the introduction of modern awards and the NES (1 January 2010) will override the conditions of an existing agreement that are inconsistent with the Fair Work Act and the minimum wages of modern awards. This issue was also dealt with in a previous article published by WorkplaceInfo.
 
Individual common law contracts
 
A number of issues are expected to impact on the minimum conditions of employment applicable to award/agreement free employees. This category of employee is generally referred to as being employed under a ‘common law contract of employment’.
 
The Australian Industrial Relations Commission (now Fair Work Australia (FWA)) has indicated that a ‘General Award’ to cover award/agreement free employees will be considered in Stage 4 of the award modernisation process. The contents and scope of this proposed award have yet to be revealed, although this Award is expected to be finalised by early December 2009.
 
The introduction of the National Employment Standards (NES) may also impose additional obligations on an employer with any employee not covered by an industrial instrument, including additional minimum obligations relating to redundancy pay, community service leave and flexible working arrangements.
 
Employment conditions currently determined by the WorkChoices Standard will continue to operate, such as minimum entitlements with respect to annual leave, personal/carer’s leave (including compassionate leave), parental leave, public holidays, notice of termination of employment by the employer, and maximum hours of work.
 
Source: Paul Munro, IR Consultant.
 
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