Howard's 'Big Brother' fairness test

News

Howard's 'Big Brother' fairness test

The Federal Government's new fairness test for AWAs will involve the hiring of 600 new public servants, cost $370m, and impose a third party to oversee all individual and collective agreements.

WantToReadMore

Get unlimited access to all of our content.

The Federal Government's new fairness test for AWAs will involve the hiring of 600 new public servants, cost $370m, and impose a third party to oversee all individual and collective agreements.

The $370m will be pumped into the scheme over four years and OEA staff will treble to 750 over the next year, including short-term contract staff to deal with the current backlog of 21,000 unassessed AWAs.

The new fairness test reverses the Howard Government's pledge under WorkChoices to 'free up' workplace relations and reduce them to mutual agreements between employers and employees without the intervention of third parties such as trade unions. Under the new system a Federal Government bureaucracy will decide what agreements will be allowed in the workplace.

For example, even if employees are willing to trade off protected award conditions such as penalty rates for 'family friendly' arrangements such as leaving work early to pick children up from school, they will have to include in the AWA application 'information about their personal circumstances, including family responsibilities' to justify the trade off.

Personal contact

The Workplace Authority (currently the OEA) will have the right to make personal contact with employees and employers over these arrangements.

Workplace Relations Minister, Joe Hockey, covered the basic components of the new fairness test in his second reading speech in Parliament last night. The legislation will be debated for 90 minutes today and then referred to a Senate Committee.

Hockey said the legislation will require the Workplace Authority to apply the fairness test to ensure that workplace agreements provide fair compensation in lieu of protected award conditions such as penalty rates.

If an agreement doesn't pass the Fairness Test, it will need to be changed so that it is fair and the employer will have to make up any back pay. The Workplace Ombudsman (currently the OWS) will ensure that employers comply with their legal obligations in regard to the fairness test.

Can't dismiss workers if AWA fails test

The legislation will make it clear that employers cannot dismiss an employee because a workplace agreement fails, or may fail, the fairness test, and cannot coerce existing employees into modifying or removing protected award conditions.

However, the 'operational reasons' capacity to dismiss workers could come into play in such circumstances, since employers could argue that if the AWA fails the test they can't continue to run their enterprises.

Under the fairness test, protected award conditions are penalty rates (including for working on public holidays and weekends), shift and overtime loadings, monetary allowances, annual leave loadings, public holidays, rest breaks and incentive-based payments or bonuses.  These will be able to be traded away with 'fair' compensation.

Fairness test

The fairness test will apply to workplace agreements lodged on or after 7 May 2007. Where an agreement, including an agreement made before 7 May 2007, is varied, the whole agreement will be subject to the fairness test — but only if the variation excludes or modifies protected award conditions.

The fairness test will apply to employees with a gross basic salary of less than $75,000 per annum who are employed in an industry or occupation in which the terms and conditions are usually regulated by an award, and where the agreement excludes or modifies protected award conditions.

Collective agreements

In addition, all collective agreements covering employees in an industry or occupation in which the terms and conditions are usually regulated by an award, and where the agreement excludes or modifies protected award conditions, will be subject to the fairness test.

How will the fairness test be conducted?

Agreements will operate from the day they are lodged with the Workplace Authority. The Workplace Authority has to be satisfied that a workplace agreement provides fair compensation to an employee in lieu of the exclusion or modification of protected award conditions.

In deciding whether a workplace agreement passes, or does not pass, the fairness test, the Workplace Authority may inform itself in any appropriate way. In many cases, it will be able to assess an agreement based on the agreement and information lodged with it.

Personal circumstances

For example, when the agreement is lodged, employees will be able to include information about their personal circumstances, including their family responsibilities and the significance they attach to the particular workplace flexibilities for which they have traded off protected award conditions.

The Authority will also be able to contact the employees and the employer where necessary.

The fairness test will not involve legalistic hearings, and the Workplace Authority will not arbitrate agreement outcomes.

When considering whether a workplace agreement provides fair compensation, the Workplace Authority must first have regard to the monetary and non-monetary compensation that the employee or employees will receive in lieu of the protected award conditions.

Non-monetary compensation

The legislation defines non-monetary compensation as compensation for which there is a money-value equivalent, or where a money value can reasonably be assigned, and which confers a benefit or advantage on the employee that is of significant value to the employee.

Hockey said a meal provided by an employer to an employee who is regularly required to work overtime will not constitute adequate compensation in lieu of penalty rates for overtime.

Slice of pizza 'not enough'

'This means that, contrary to misleading claims that have been made, a slice of pizza will not constitute non-monetary compensation,' he said.

In most cases it is expected that a higher rate of pay will be agreed to in lieu of protected award conditions that have been modified or removed.

In establishing what is fair compensation the Workplace Authority must consider the work obligations of the employee or employees under the workplace agreement. For example, the Workplace Authority would consider whether employees were required to work shift work or on weekends and would otherwise have been entitled to penalty rates.

Economic circumstances

'Only in exceptional circumstances, and where the Workplace Authority is satisfied that it is not contrary to the public interest to do so, may the Workplace Authority also have regard to the industry, location or economic circumstances of the employer, and the employment circumstances of the employee or employees in deciding whether fair compensation is provided,' Hockey said. 'The Workplace Authority may decide it is appropriate to consider the economic circumstances of an employer when a workplace agreement is part of a reasonable strategy to deal with a short-term crisis.'

Hockey gave as an example employees working in a canning factory in a regional town who negotiate a one year agreement that excludes penalty rates so the factory can remain competitive where the business is struggling due to the impact of the drought.

'This will keep the business alive and maintain jobs,' he said.

Overall effect

In the case of a collective agreement, the Workplace Authority must be satisfied that, on balance, the collective agreement provides fair compensation, in its overall effect on the employees.

Hockey said that in most cases where employees have had protected award conditions removed or modified they will be compensated with a higher rate of pay for each hour worked.

What if an agreement fails the fairness test?

Where an agreement does not pass the fairness test, the Workplace Authority will provide advice to the employer and employee on how the agreement could be changed to make it fair.

The employer and employee will have 14 calendar days to make the agreement fair. Fixing a failed agreement could be done by varying the agreement or making an undertaking, which would be enforceable.

If an agreement is not fixed, it will cease to operate at the end of the 14-day period.

Revert to the award

The entitlements of the employee or employees will revert to the arrangements that would have applied to them had they not made the unfair agreement. This could be an earlier workplace agreement or the award.

An employee with a designated award (and where no other workplace agreement is in place) will retain an entitlement to the protected award conditions from the designated award.

Where an agreement initially fails the test, but is satisfactorily rectified, the employee will generally be entitled to compensation or back pay for the period during which the agreement was unfair.

Back pay

The employer will be expected to make up any back pay from the time the agreement was lodged for any entitlement the employee would otherwise have been entitled to.

Where an agreement does not pass the fairness test and an employer does not compensate the employee or employees, the Workplace Ombudsman will be able to recover any shortfall in entitlements on behalf of the affected employees.

A court may also impose a penalty if compensation is not paid.

Will a proposed or draft agreement meet the fairness test?

The Workplace Authority will offer a pre-lodgement assessment of proposed agreements against the fairness test. Either an employee or an employer can request a pre-lodgement assessment of a proposed agreement.

This process helps people make fair and clear agreements from the start. It helps them to know where they stand in regard to protections, entitlements and obligations. It minimises the risk of a shortfall in payments where an agreement fails the fairness test.

Written advice

The pre-lodgement assessment of a proposed agreement is an administrative, rather than a legislative process. This is because the legislative fairness test can only be applied to a properly made and lodged agreement with identifiable parties.

Where a pre-lodgement assessment is requested, the Workplace Authority will provide written advice indicating whether or not the agreement would pass the fairness test.

Provided the circumstances have not changed when the agreement is lodged, pre-lodgement approval will result in consideration of the agreement being fast tracked on lodgement.

The Legislation.

The Explanatory memorandum.

Hockey's Second reading speech.

Related

How the fairness test will work in practice

Money the key to fairness test, says Hockey

Howard won't guarantee all AWAs will be 'fair'



  

 

Post details