Common terms — Fair Work system and modern awards


Common terms — Fair Work system and modern awards

This is a glossary of terms that commonly apply in the Fair Work Act, modern awards, and state and territory employment legislation.


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This is a glossary of terms that commonly apply in the Fair Work Act, modern awards, and state and territory employment legislation.
When WorkChoices was introduced in March 2006, a number of new terms, expressions and acronyms were introduced into the workplace law lexicon. The same thing will occur when the Fair Work Act (FWAct) becomes law on 1 July 2009. There are also descriptions of new institutions which may need clarification.
The following is a glossary of some of the terms and expressions which will be introduced with the FWAct, as well as those which will appear in modern awards and, also, current state and territory employment legislation which will continue to apply under the new system. It is hoped this glossary of terms and expressions will provide some familiarity to the reader when they appear in future articles on WorkplaceInfo.
More terms and expressions will appear in a later article to be published on WorkplaceInfo.
Terms and expressions — Fair Work Act
Base rate of pay: This is defined in s16 of the FWAct to mean the rate of payable to the employee for his or her ordinary hours of work, but not including: incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates, or any other separately identifiable amounts.
Better off overall test (BOOT): This 'test' will replace the current 'no-disadvantage test' and will apply to agreements lodged with FWA from 1 January 2010. The BOOT is a comparison against the provisions of the NES and the relevant modern award (where applicable). The current ‘no-disadvantage test’ will continue to apply to agreements lodged between 1 July and 31 December 2009, which will be a comparison against the current provisions of the Standard and the relevant pre-reform federal award or NAPSA.
De facto partner: This term means a person who, although not legally married to the employee, lives with the employee in a relationship as a couple on a genuine domestic basis (whether the employee and the person are of the same sex or different sexes), and includes a former de facto partner of the employee. This term is relevant when an employee is claiming carer’s leave or compassionate leave.
Enterprise agreement: This term means a single-enterprise agreement or a multi-enterprise agreement.
Excluded period: This refers to a period of absence that does not count as service for the purposes of accruing paid leave under the NES, such as annual leave, personal/carer’s leave and redundancy pay. An excluded period includes: any period of unauthorised absence, or any period of unpaid leave or unpaid authorised absence (except community service leave or a period of stand down). However, an ‘excluded period’ does not break an employee’s continuity of service with their employer.
For the purposes of calculating service with respect to requests to flexibility arrangements, parental leave and related entitlements, and notice of termination or payment in lieu of notice, only a period of unauthorised absence does not count as service.
Fair Work Act (FWAct): This legislation replaces the Workplace Relations Act 1996 and establishes a new body called 'Fair Work Australia' from 1 July 2009.
Fair Work Australia (FWA): This body will replace the Australian Industrial Relations Commission, Australian Industrial Registry, Australian Fair Pay Commission, Australian Fair Pay Commission Secretariat, Workplace Authority, Workplace Ombudsman, and the Australian Building and Construction Commission (to be absorbed into FWO from 1 February 2010).
Fair Work instrument: This term refers to a modern award, or an enterprise agreement, or a workplace determination, or an FWA order.
Fair Work Ombudsman (FWO): This body is the related but independent statutory body to FWA and will have an educative role, and will have inspectors with powers to investigate and enforce legislative requirements. It will perform a similar role to the current Workplace Ombudsman.
Full rate of pay: This is defined in s18 of the FWAct to mean the rate of pay payable to the employee for his or her ordinary hours of work, including incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates, or any other separately identifiable amounts.
Genuine redundancy: An employee will be genuinely redundant if: his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; the employer has complied with any consultation requirements in a modern award or enterprise agreement; and, it was not reasonable in all the circumstances to redeploy the employee within the enterprise of the employer (or an associated entity of the employer).
High income threshold: This refers to an employee covered by a modern award who can agree to avoid or modify the award. The employer must provide a written undertaking guaranteeing annual earnings at least equal to the 'high income threshold' ($100,000 pa indexed). These employees remain covered by the award and may access the unfair dismissal provisions. However, where an employee is not covered by an award or agreement, an employee earning the high income threshold or greater is precluded from making a claim for unfair dismissal.
Immediate family: This means a spouse, de facto partner, child, parent, grandparent, grandchild, or sibling of the employee, or a child, parent, grandparent, grandchild, or sibling of the spouse or de facto partner of the employee.
Industrial action: This is defined in s19 of the FWAct to mean: the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work; a ban, limitation or restriction on the performance of work by an employee or on the acceptance or offering for work by an employee; a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work; the lockout of employees from their employment by the employer of the employees.
Industrial action does not include: action by employees which is authorised or agreed to by the employer of the employees; action by an employer which is authorised or agreed to by, or on behalf of, employees of the employer; action by the employee based on reasonable concern about the imminent risk to his or her health and safety; and the employee not unreasonably failing to comply with a direction from his or her employer to perform other available work, whether at the same or another workplace, which was safe and appropriate for the employee to perform.
Industry-specific redundancy scheme: This means redundancy arrangements in a modern award which are described in the award as an industry-specific redundancy scheme. An example of such a scheme is one that operates in the building and construction industry and related industries.
Lockout: An employer locks out employees from their employment if the employer prevents the employees from performing work under their contracts of employment, without terminating those contracts of employment.
Long term casual employee: This is an employee at a particular time who is a casual employee, and has been employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months.
Medical practitioner: Refers to a person who is registered, or licensed, as a medical practitioner under a law of a State or Territory which provides for the registration or licensing of medical practitioners. This is relevant with respect to an employee meeting the evidentiary requirements (medical certificate) when claiming paid personal/carer’s leave.
Minimum employment period: This refers to the minimum period after which an employee may claim unfair dismissal. In the case of an employer with 15 employees or more, the minimum employment period is six months continuous service, whereas, an employer with fewer than 15 employees the minimum period is 12 months.
Amendments to the FWBill resulted in the definition of the number of employees for the purposes of unfair dismissal being changed to now mean fewer than 15 'full-time equivalent employees' (calculated by averaging the ordinary hours worked by all employees in the business over the four-week period immediately prior to the employee’s termination, and dividing that by 38). This will apply until 1 January 2011, after which the number of employees will be based on a simple headcount.
Source: Paul Munro, IR Consultant.
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