The fairness test - some points of detail

Q&A

The fairness test - some points of detail

The finer points of the fairness test relating to Federal agreements are generating some questions from employers. Here are two - one relating to whether an agreement is assessed in its totality or item by item, and the other on how to assess the fairness of the negotiated employment conditions when there is no relevant industrial instrument to which to compare 'protected award conditions'.

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The finer points of the fairness test relating to Federal agreements are generating some questions from employers. Here are two - one relating to whether an agreement is assessed in its totality or item by item, and the other on how to assess the fairness of the negotiated employment conditions when there is no relevant industrial instrument to which to compare 'protected award conditions'.

Compare 'totality' or item by item?

Q. We are currently negotiating several Australian Workplace Agreements (AWAs) with staff that could be categorised as 'award free', for example, senior managerial and professional staff.

With introduction of the fairness test, how do we assess the fairness of the negotiated employment conditions when there is no relevant industrial instrument to which to compare their 'protected award conditions'?

A. The Explanatory Memorandum to the amendment that introduces the fairness test states that the fairness test would require the Workplace Authority to be satisfied that, in the case of an agreement, on balance, the agreement provides fair compensation, in its overall effect on employees, in lieu of the modification or removal of the employees 'protected award conditions'.

In determining whether fair compensation has been provided, the Workplace Authority would primarily consider the value of any monetary or non-monetary compensation.

No relevant industrial instrument

Q. We are currently negotiating several Australian Workplace Agreements (AWAs) with staff that could be categorised as 'award free', for example, senior managerial and professional staff.

With introduction of the fairness test, how do we assess the fairness of the negotiated employment conditions when there is no relevant industrial instrument to which to compare their 'protected award conditions'?

A. When lodging the AWAs, the Workplace Authority will compare the negotiated conditions with those of a 'designated' award, ie as determined by the Authority.

At this stage, there is no indication as to what type of award/s the Authority regards as appropriate to these types of employees.

However, it should be noted that the fairness test only applies, in the case of an AWA, where the employee's gross full-time (or full-time equivalent) basic salary is less than $75,000 per annum. The amount of $75,000 excludes incentive-based payments and bonuses, loadings (other than casual loadings), monetary allowances, penalty rates, any other separately identifiable entitlements that are similar to these entitlements, or employer superannuation contributions.

Related

The Fairness Test - key points

How the fairness test will work in practice

Fact sheet and fairness documents available
  

 

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