Current IR legislation and new awards

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Current IR legislation and new awards

Dick Grozier, Director of Industrial Relations, Australian Business Industrial, continues his series on how Australia will move to Labor’s new IR system. In this article he looks at how current legislation is placed in preparation for the transition to modernised and simplified awards.

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Source: Dick Grozier, Director of Industrial Relations, Australian Business Industrial
Dick Grozier, Director of Industrial Relations, Australian Business Industrial, continues his series on how Australia will move to Labor’s new IR system. In this article he looks at how current legislation is placed in preparation for the transition to modernised and simplified awards.

The first article in the series considered employment standards and the modernisation of awards: How IR may look under Labor.

Employers affected

The actual shape of the award modernisation and simplification process will depend on the nature of the transitional legislation, and how it deals with relevant provisions of the current Act.

It is important to bear in mind that the government’s proposed system, will, as a minimum, cover private sector employers.

Employers who are currently in the state system are part of the mix.

Pre-27 March 2006 federal awards bound named respondents, members of certain named organisations and/or bound employers on a common rule basis.

Similarly, pre-27 March 2006 state awards bound named employers or bound employers on a common rule basis. There were some organisational state awards. Importantly, different jurisdictions and localities within them have different patterns of common rule coverage.

Federal awards

Pre-27 March 2006 federal awards gave rise to two distinct instruments for federal system employers – pre-reform awards and preserved pay scales. Both have continuing effect in the post-27 March 2006 system unless explicitly revoked.

The pay rates in a pre-reform award have been overtaken by those in the pay scale derived from the same award. Leave provisions in pre-reform awards have generally been replaced by those in the Standard.

Most pre-27 March 2006 (federal) awards also gave rise, separately, to transitional awards which apply to non-federal system employers previously bound by them. Many of these would be federal system employers in the new scheme.

Transitional awards

Transitional awards are not subject to the Standard which means that there will be some differences in leave provisions, and pay rates will have slightly diverged from those in the equivalent pay scale.

Transitional awards will have continuing effect for the period of the modernisation and simplification process.

State awards

Pre-27 March 2006 state awards gave rise to two distinct instruments for federal system employers – NAPSAs and preserved pay scales. Pay rates in NAPSAs were made unenforceable by the WorkChoices pay scales regime that took pay scales out of the NAPSAs. Leave provisions in NAPSAs have generally been replaced by those in the Standard.

NAPSAs will cease to operate on 27 March 2009 but the pay scale derived from the state award has continuing effect unless explicitly revoked.

There is no general system for transition from a NAPSA to a (pre-reform) award although the Act provides that employers or employees can apply to be bound by a federal award. Certain conditions (preserved notional entitlements) from the NAPSA may transfer with the employees, but most conditions do not.

The transitional legislation can be expected to extend the life of NAPSAs to the end of the transitional period. The (state award derived) pay scale continues as a matter of law.

Complications

In certain circumstances a NSW pre-27 March 2006 state award gave rise to a Preserved State Agreement (PSA), rather than a NAPSA and a pay scale. Many, but not all, of these are enterprise awards. PSA terms apply as written.

Pre-27 March 2006 State awards, as varied from time to time, continue to apply to non-federal system employers who were bound by them or who were established after that date. Many of these will be federal system employers in the new scheme. Pay rates, leave provisions and some other conditions will differ from those in the related NAPSA and pay scale.

Existing rationalisation provisions

The current Act envisages that awards are rationalised and simplified. Simplification (deletion of non-allowable matters) is at the behest of the AIRC but may take place with rationalisation. The AIRC may set principles for simplification.

Rationalisation (reduction in the numbers of awards and removal of state based differences in entitlements) is at the behest of the Minister who makes a formal rationalisation request. The first rationalisation request requires the AIRC to review all awards so as to comply with the requirement to eliminate state-based differences.

The Act does not use the term 'modernisation' in any defined way although the intention was that rationalisation and simplification would give rise to fewer awards which were less complex and more conducive to the efficient performance of work.

Nature of award modernisation

This range of different instruments and conditions means that award modernisation may not simply be a process for amalgamating a set of related awards.

Transitional legislation would probably not address the detail of these different arrangements but it would need to enable the outcome that the government is seeking.

It could be that it will retain the Minister’s power to request 'rationalisation' and that the modernisation request provides some of the detail. It seems likely that the transitional bill may be bigger than is generally supposed.

Related

How IR may look under Labor

Labor’s plans for award simplification

 

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