AWAs 'fairer' than common law contracts, claims AiG


AWAs 'fairer' than common law contracts, claims AiG

The employers group AiG has attacked Labor's plan to replace AWAs with common law contracts, saying AWAs are 'fairer' for both sides in the workplace.


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The employers group AiG has attacked Labor's plan to replace AWAs with common law contracts, saying AWAs are 'fairer' for both sides in the workplace.

However AiG's case against common law contracts depends in part on provisions of the Federal Government's new 'Fairness test' for AWAs, which is yet to be even tabled in Parliament and for which there are currently only very sketchy details.

AiG Chief Executive, Heather Ridout, said Opposition Leader Kevin Rudd has been quoted in the media over recent days 'asking business to explain why common law contracts are not an acceptable alternative to AWAs'. 

She said the reasons could be seen in an AiG fact sheet (see below) but that basically AWAs 'with a fairness test' are much fairer for both employers and employees than common law contracts. 

Difficult and expensive

'Common law contracts are very difficult and expensive to enforce and do not provide desired and necessary flexibility because they cannot modify award provisions,' she said.  (As part of its plan to increase the use of common law agreements Labor is planning to simplify and modify awards to allow for greater flexibility).

'Also, common law contracts are inconsistent with the assertion in Labor's IR policy that a "deal is a deal" and there should be no right to take industrial action during an agreement's term,' Ridout said.

Ridout said that AWAs are operating in a wide range of industries including telecommunications, information technology, construction, transport, and manufacturing, so any 'transitional fix' to Labor's proposal to 'rip up' AWAs, apply to all industries and not be just a political fix for the mining industry.


AiG provided the following comparison of common law contracts and AWAs:


Common Law Contracts


Vetted and approved by a Statutory Agency No Yes
Required to meet a fairness test No Yes
Are subject to a maximum nominal term No Yes
Relatively easy to enforce No Yes
Specific penalties apply for breeches No Yes
Industrial action outlawed during term No Yes
Can override award provisions, subject to a fairness test No Yes
Can override collective agreements No Yes
Can override State legislation No Yes

Ridout said that under the Workplace Relations Act, substantial protections are in place to prevent unfairness to employees covered by AWAs including:

  • It is unlawful for an employer to coerce or apply duress to an employee in connection with an AWA
  • It is unlawful to terminate an employee's employment for refusing to make, sign, extend, vary or terminate an AWA
  • It is unlawful for an employer who takes over a business to require an employee to sign an AWA as a condition of employment (legislative amendment announced)
  • The terms of an AWA must be no less favourable than the Australian Fair Pay and Conditions Standard which covers key conditions of employment including wage rates, casual loading, annual leave, personal/carer's leave, compassionate leave, parental leave and maximum ordinary hours of work
  • Penalty rates, allowances, loadings and other 'protected award conditions' apply under an AWA unless the employee has agreed to any modifications
  • AWAs are subject to a 'fairness test' if any 'protected award conditions' are removed or modified (legislative amendment announced)
  • AWAs are vetted and approved by a Statutory agency to ensure that legal requirements and the 'fairness test' are met (legislative amendment announced), and
  • An employee negotiating an AWA is entitled to appoint a bargaining agent to represent him or her

Disruption and disadvantage

'AWAs have been a key feature of Australia's workplace relations system for more than a decade,' Ridout said. 'To abolish them would cause widespread disruption and disadvantage to both employers and employees. It is essential that AWAs be retained.'

Ridout said that AiG continued to have dialogue with Labor on these and other matters.


'Substantial risk' in Labor's IR policies, says AiG

Labor dodges issue on workers 'walking away' from AWAs

'Ripping up' AWAs might take Labor until 2013

Abolishing AWAs is 'economic vandalism', say miners



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