State awards

This commentary provides a brief background to the federal and state systems of awards and discusses the effect of the referral of state industrial powers to the Commonwealth.

This commentary provides a brief background to the federal and state systems of awards and discusses the effect of the referral of state industrial powers to the Commonwealth.
Each of the Australian states historically had their own system of industrial relations regulation. This meant that there were six separate state systems as well as the federal jurisdiction (which also covered the territories).
Victoria referred its constitutional industrial relations (IR) powers to the Commonwealth in 1996; and in 2009, all other states, with the exception of Western Australia, also agreed to refer their IR powers. The aim of this referral was to end the overlap and duplication of state and federal industrial relations systems.
The referral of powers for NSW, Queensland, South Australia and Tasmania came into effect on 1 January 2010, at the same time as the commencement of modern awards under the Fair Work Act.
Western Australia remains the only state with its own separate industrial relations system which covers non-constitutional corporations. Western Australian awards can be viewed on Western Australian Industrial Relations Commission website. Western Australian employers that are constitutional corporations are covers by the Fair Work system.
Effect of referral on State awards
Employees who were under state IR systems prior to 1 January 2010, stayed on their state awards for 12 months after moving to the federal system, with a potential five-year transition to modern awards.
From 1 January 2010, federal awards with the same terms as the state awards were deemed to come into existence and known as Division 2B State awards.
Division 2B State awards governed the terms and conditions of employment for the relevant employees for 12 months.
During 2010, Fair Work Australia (now the Fair Work Commission (FWC)) was required to consider whether a modern award should be varied to provide appropriate transitional arrangements for incoming state employees and employers.
The Fair Work (State Referral and Consequential and Other Amendments) Act 2009 inserted Div 2A into Pt 1-3 of the Fair Work Act with effect from 25 June 2009. Division 2A gave effect to Victoria’s workplace relations reference to the Commonwealth.
Schedule 1 to this Act inserted Div 2B into Pt 1-3 of the Fair Work Act and gave effect to state references of workplace relations matters to the Commonwealth after 1 July 2009 but on or before 1 January 2010. The creation of Div 2B was necessary to accommodate differences in the timing of state references.
Pay rates protected
The existing pay scales of former state employees are protected as they move into modern awards. FWA has the power to make a ‘take-home pay order’ in the circumstance where employees’ take-home pay is reduced as a result of moving from a state award to a federal modern award.
Same long service leave provisions continue
Employees on these Div 2B state instruments also keep any long service leave provisions they currently have under state laws.
Federal modern awards are not able to include long service leave, but again the FWC has the power to make an order which preserves long service leave entitlements for affected employees from 1 January 2010, which would operate alongside the relevant modern award. Such an order can operate for a maximum period of five years from 1 January 2010, during which time the intention is to develop a uniform national long service leave standard.
Sample documentation
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