New AWA system is a 'fair cow' for employers


New AWA system is a 'fair cow' for employers

As of Monday all employers operating under WorkChoices who want to put employees on AWAs must do so fairly — except there is no definition of 'fair' and no guidelines on how to achieve it.


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As of Monday all employers operating under WorkChoices who want to put employees on AWAs must do so fairly — except there is no definition of 'fair' and no guidelines on how to achieve it.

But if they get it wrong, they face back pay to each worker treated 'unfairly' for the time between when the AWA was lodged and when the legislation is drafted, passed by Parliament and enacted, the compliance system is set up (with a mass of bureaucrats to inspect each and every AWA), and their AWAs finally get vetted.

This is the situation facing employers under the Federal Government's AWA 'Fairness Test' system announced last week and in operation since midnight Sunday.

The fairness testing will be conducted by the Office of Employment Advocate (OEA), to be renamed the Workplace Authority (which will presumably be given guidelines, or a template, by which to assess fairness).

Protected award conditions

Unlike the old No Disadvantage Test, the Fairness Test will not apply to an overall comparison with all terms of an award, but only to compensation for employees prepared to give up any of the following protected award conditions:

  • 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 and bonuses

The OEA website currently has an 'important notice' giving employers and employees what information there is available on the Test, and how it will be conducted.

Higher rate of pay

It says the OEA will: 'conduct the Fairness Test by considering both the monetary and non-monetary compensation offered, relative to what would have been payable under the relevant award'.

'In most cases this will mean a higher rate of pay in lieu of protected award conditions that have been modified or removed,' it says.

In his statement on the Fairness test, Prime Minister John Howard said that in establishing what is fair compensation, the Workplace Authority will consider the work obligations of the employee, for instance whether the employee would be required to undertake shift work at weekends.

Economic circumstances

The Authority will also consider, where appropriate, other factors such as the industry, location and economic circumstances of the business and the specific employment circumstances or opportunities of the employee. It will take into account all relevant working arrangements and entitlements, including family-friendly conditions.

In commenting on the way the Test might be interpreted, Howard suggested that parking areas at the workplace could be seen as compensation for trade-offs, and that in some cases 'just the offer of a job' would be compensation in itself. There could also be no compensation if the employer was in difficult economic circumstances, and the employee accepted this.

In any case the OEA says that if an AWA is knocked back, employers will be told why it is not considered fair, 'how it could be changed to make it fair, and the amount of back pay to compensate the employee'.

'In these circumstances, back pay from the date the agreement was lodged will need to be paid,' says the OEA statement.

14 days to agree, or it's void

The employers and employees will then be given 14 days to agree on how they will vary the agreement so that it fairly compensates the employees for changes to protected award conditions.

If the necessary changes are not made, the agreement will be void - and presumably the employer returns to the award conditions. The major problem with all this is that currently employers have no idea, and no way of finding out, what 'fair' means. But if they get it wrong they will have to pay.

World of uncertainty

Opposition IR spokeswoman, Julia Gillard, said Australian employers and workers must be 'asking themselves how on earth they make a lawful agreement' under these changes.

'Employers are exposed to back pay if they get it wrong and employees are in a world of uncertainty,' she said.


IR watchdog warns employers on AWAs

Howard's AWA double back-flip over safety net

AWA changes 'reek of cynicism', says Labor

Govt's AWA fairness test might include 'free pizza': ACTU



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