Changes to WorkChoices: what HR needs to do now

Analysis

Changes to WorkChoices: what HR needs to do now

The Federal Government intends to introduce stage 1 of its overhaul of WorkChoices as soon as possible. What should HR practitioners be doing NOW in light of Labor’s new legislation? And what should they start doing to prepare for the longer term?

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The Federal Government intends to introduce stage 1 of its overhaul of WorkChoices as soon as possible. What should HR practitioners be doing NOW in light of Labor’s new legislation? And what should they start doing to prepare for the longer term?

What changes in stage 1?

The Bill introduced on 13 February 2008 (that passed through Parliament on 19 March)  is 'transitional' legislation.

Its main purposes are to:

  • abolish future new Australian Workplace Agreements (AWAs), although AWAs lodged before the Bill commences will remain in force for the time being - see further discussion below
  • provide for Individual Transitional Employment Agreements (ITEAs) for a limited period as a 'stopgap' replacement for AWAs for new employees - again, see further discussion below
  • provide various transitional arrangements to cover issues such as the termination of existing agreements
  • replace the WorkChoices Fairness Test with a no-disadvantage test, basically the same as the one that existed under pre-WorkChoices legislation until March 2006.

Bigger changes later

The main changes to the IR legislation are not scheduled to commence until 1 January 2010. These are wider-ranging and will cover awards, types of agreements, minimum employment standards, termination of employment, the regulatory bodies, right of entry and resolution of industrial disputes.

This means that HR practitioners have to anticipate two stages of changes:

  • the transitional ones that will commence soon
  • the wider-ranging ones that are expected to commence in 2010.

Therefore, they will have to implement both short-term actions and start developing longer-term strategies.

Not such a big deal this time?

It’s fair comment to say that the proposed changes this time are nowhere near as substantial as those introduced by WorkChoices in 2006, nor is the reaction to them as strong. Firstly, the constitutional basis of the legislation is unchanged this time, so no employers and employees will change jurisdictions. Secondly, the timeframe for introduction of changes is much longer. The transitional arrangements are not as complicated this time, although few people are likely to describe them as ‘simple'.

At the HR Practices Day seminar held by the Australian Human Resources Institute (AHRI) in Sydney on 12 March 2008, HR practitioners generally reported a low level of interest and enquiries from employees and line managers about the changes - again, a sharp contrast to WorkChoices.

The Federal Opposition, after some contemplation, appears to have decided that it will not oppose the legislation. Employer organisations, while criticising individual details, have generally indicated that they can cope with the changes. Unions, while also sometimes critical of individual details, obviously regard it as an improvement over WorkChoices. All this contrasts with the strong opposition and widespread debate that occurred when WorkChoices was announced and introduced.

… but still some uncertainty

However, one issue the latest changes do have in common with WorkChoices is that there is some uncertainty about various details such as the precise meaning of particular terms, and the manner in which the new system will operate. Hopefully many of these issues will be resolved when the Government introduces its more substantive legislation to implement the rest of its changes. Also, because the main provisions are not scheduled to commence until 2010, there is still time to identify potential problems and deal with them.

So what does HR need to do NOW?

There are items that HR practitioners need to attend to in the short term. This is the first of a series of articles that will discuss how HR should respond to the various changes.

Audit

As with WorkChoices, the starting point is to audit your current employment arrangements and practices to ensure that they comply with the changes that are about to commence.

Existing agreements: Any agreement you may have in place before the date the transition legislation commences will remain in force until it expires or is terminated. The agreement would have had to pass either the Fairness Test (if it altered a 'protected award condition') or the previous no-disadvantage test in order to come into effect - or only the Australian Fair Pay and Conditions Standard (AFPCS) if it commenced after WorkChoices commenced in March 2006 and before the Fairness Test commenced in May 2007.

The new no-disadvantage test will only apply to agreements lodged after the commencement date of the legislation noted above, so existing agreements will NOT need to be amended in this regard.

AFPCS: Similarly, the existing AFPCS will continue to apply to these agreements.

A more comprehensive list of minimum National Employment Standards will replace the AFPCS on 1 January 2010 and any agreements still in force at that time may need to be updated then.

AWAs: If you had at least one employee employed under an AWA prior to 1 December 2007, you can employ new employees under Individual Transitional Employment Agreements (ITEAs) or transfer existing employees to them. ITEAs are a sort of 'interim AWA' that may only operate until 31 December 2009 (the day before the main changes to the legislation will commence). One difference from AWAs is that they will have to meet the no-disadvantage test rather than the current Fairness Test.

No-disadvantage test: An important difference is that the new test will apply to the full contents of all new agreements, whereas the Fairness Test only applies if the proposed agreement modifies or removes one or more 'protected conditions' and the employee earns less than $75,000 a year.

Also, this change is retrospective - an ITEA may be lodged with the Workplace Authority, but if it fails the test at a later date it will be invalidated.

The new no-disadvantage test will compare the total contents of the agreement with either an applicable collective agreement, a relevant award (or appropriate designated one) or, in the absence of either of those, the AFPCS. The Workplace Authority must be satisfied that an ITEA does not reduce the employee’s overall terms and conditions of employment.

Therefore, if you put an existing employee who had been on an AWA onto an ITEA, remember that the ITEA has to pass a more stringent test, so you may have to improve on the provisions of the old AWA to do so.

Note that long-service leave is also a factor to be included when applying the no-disadvantage test.

Varying agreements: Note, also, that if you vary an existing collective agreement (including a pre-reform certified agreement) after the transition Bill becomes law, it becomes subject to the no-disadvantage test instead of the Fairness Test.

Also note that varying existing AWAs can only be done in limited circumstances, eg to remove prohibited content or objectional provisions.

Collective agreements: NAPSAs will have their expiry dates extended to 31 December 2009, after which they can be replaced by one of the new arrangements available from 1 January 2010. ITEAs will also expire no later than 31 December 2009.

Pre-reform certified agreements and PSAs: Pre-reform Certified Agreements and Preserved State Agreements (PSAs) can have their expiry dates extended by the AIRC by up to three years from the date of the order.

Fact sheet: Another change is that, once the transition Bill becomes law, you will no longer be required to issue a copy of the Fact Sheet to all employees. However, when the main provisions commence on 1 January 2010, you will need to start issuing them with an information statement - the contents of which are yet to be finalised.

Conduct an audit of current arrangements

In summary, what you need to know is:

  • what employment arrangements all employees are currently on
  • the expiry date of each of these arrangements,and whether the new law will alter the date (eg for NAPSAs)
  • whether you currently have any employees on AWAs (if not, forget about ITEAs, you won’t be able to use them)
  • how the no-disadvantage test will affect any variations you make to existing agreements.

An issue you may have to deal with is that new employees on ITEAs may be employed under more favourable conditions than existing employees on AWAs, because the more stringent test applies to the former. If so, you will have to decide whether to vary the AWAs to achieve parity, or risk possible ill will from employees.

However, you may already have encountered similar issues when the Fairness Test commenced, as it was not retrospective and employees on AWAs that commenced before May 2007 may already be worse off than colleagues whose AWAs commenced after then.

If agreements expire or are terminated before 1 January 2010, employees will be covered by whatever award or collective agreement would have applied to them but for the agreement having ended.

AWAs

The scope to unilaterally terminate a WorkChoices AWA that has passed its nominal expiry date will be retained. This will allow employees to terminate an expired AWA where doing so may result in being covered by a more beneficial instrument.

NES

Later on, you will need to study the new National Employment Standards (NES) which will replace the AFPCS, and ensure that your various employment arrangements are upgraded, if necessary, in time to comply with the commencement date of the NES. Drafts of the NES are discussed in detail in another article.

Be proactive

2010 may seem a long time away - after all, WorkChoices only had a life of less than two years - but it will pay to do some research and preparation on behalf of your employees well before then.

Some employers and employees are looking into the positive aspects of non-union collective agreements in order to put their arrangements in the order that they want rather than waiting for the legislation to play out.

Some issues will be back on the agenda (eg when the 'prohibited content' provisions are removed) and the scope of issues that agreements may cover will widen. A future article in this series will discuss what HR practitioners should be doing in this respect.

The other thing you need to do now is to ensure that your employees and line managers know what is going on with the changes. Another future article will discuss some strategies in detail.


Related

Federal IR under Labor - a number of articles on new IR regime
 

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