Latest IR law changes: what to tell employees and line managers

Analysis

Latest IR law changes: what to tell employees and line managers

Employees have a general perception that they are going to get a better deal from the changes to IR legislation that commenced recently. This means that they and their line managers may start asking you, as HR practitioners, questions such as 'when' and 'what'.

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Employees have a general perception that they are going to get a better deal from the changes to IR legislation that commenced recently. This means that they and their line managers may start asking you, as HR practitioners, questions such as 'when' and 'what'.

The reality is that few people will be affected initially, most arrangements will continue in place for now and, in most cases, no significant changes occur until 2010. This article discusses strategies for explaining the latest developments to employees and line managers.

Anecdotal evidence is that the level of 'interest' in the changes is much less than the scene two years ago when Work Choices was about to commence. The latter attracted controversy, strong opposition and many fears that some employees would lose entitlements and be worse off before - fears that in some (but by no means all) cases turned out to be justified.

What happens now the new Act has commenced?

The legislation, referred to as a 'transition' Act, commenced on 28 March 2008. Its main purposes are to abolish the making of new Australian Workplace Agreements (AWAs), to replace the Fairness Test that applies to some new AWAs with a 'no-disadvantage' test, and to provide for various transitional arrangements. The latter apply if an employment agreement is due to expire between now and 1 January 2010, or if you hire new employees between now and then and want them to be on individual agreements. The latter date is when most of the substantial changes to the legislation are due to commence.

ITEAs

If you currently have at least one employee on an AWA, you can offer new employees the 'transitional' equivalent of one, to be known as an Individual Transitional Employment Agreements (ITEA), which will have expiry dates no later than 31 December 2009.

One difference is that ITEAs will be subject to the new 'no-disadvantage' test, which is more stringent than both the current Fairness Test and the minimum requirements that apply if an AWA was not required to meet that test.

What to tell line managers and employees

Line managers are likely to receive enquiries from their employees about how the new arrangements may affect them. Alternatively, employees may approach the HR function directly or through their union representatives. It is recommended that you brief your line managers about the changes, to ensure they provide accurate and consistent information to employees.

Unchanged for a while

The most important point (as noted above) is that in most cases things are unchanged for the time being.

Employees and managers may have heard about changes to 'unfair dismissal' entitlements, awards, upgraded minimum employment standards and right of entry provisions. However, none of those will commence (if passed by Parliament) until 1 January 2010. At present, the Government has announced the general scope of these changes, but has not introduced the legislation to implement them, so precise details of the changes are not yet known. That’s what you should tell line managers and employees about these issues for now, with a promise to keep them informed as developments occur.

Whatever employment arrangement each employee is under at present - AWA, collective agreement, award, NAPSA or PSA - it will continue unchanged, which means current employees’ entitlements will remain unchanged at the time. This will remain the case until the due expiry date of the arrangement.

Note: The legislation allows the extension of the expiry date or variation of PSAs and pre-reform certified agreements for up to three years beyond the date of an order by the AIRC - subject to the no-disadvantage test. These instruments continue until terminated or replaced.

If the current expiry date of the document is 31 December 2009 or later, tell employees that the current arrangements will remain unchanged until at least then. After that, one of the new arrangements under the (announced but yet to be introduced) legislation will apply, and you will discuss the matter further when precise information is available. If the document is due to expire before 31 December 2009, explain that one of the transitional arrangements will apply at least until 1 January 2010 and provide information on how these arrangements will work in each case.

New employees

Line managers will also require information on requirements in relation to new employees they hire. If the employee will be in an occupation or work area covered by an award or collective agreement, there is no change - new employees simply join existing ones with similar entitlements. If he/she is to be on an executive contract, likewise no legislative change.

Line managers may express an interest in ITEAs, or ask if they can continue to use AWAs. Make it clear that ITEAs are only an option if there was already at least one employee on an AWA at 1 December 2007, otherwise forget about them and employ under the terms of a relevant award or collective agreement. Also make it clear that ITEAs are subject to the 'no-disadvantage' test, not the Fairness Test, and this could mean that an ITEA has to provide more generous entitlements in some respects than existing AWAs. It would be useful to explain to line managers how the 'no-disadvantage' test will operate.

Finally, if line managers have been issuing Fact Sheets to employees since it became a requirement in September 2007, this obligation ceased when the transition legislation commenced (28 March 2008). It will be replaced by a new similar requirement, but not until 1 January 2010.

How to tell them

Although the above changes may seem benign after the turmoil of the introduction of Work Choices, don’t underestimate the importance of keeping managers and employees properly informed. WorkChoices in many cases created a work regulatory environment of great uncertainty for all parties involved. Even two years later, this uncertainty still exists, 2006 'transition arrangements' are still running their course and are now about to be replaced by new arrangements to 're-transition' them!

In other words, more changes are about to occur when the dust is yet to settle on the previous ones, and there will now be a new period with some uncertainty until 1 January 2010 at the earliest.

Helping line managers

As HR practitioners, you can help your line managers in the following ways:

  • provide briefing sessions that give them an overview of the immediate and short-term changes flowing from the commencement of the transition legislation
  • provide consultation regarding the introduction of the 2010 changes
  • provide regular updates as developments occur - for example when existing or transitional employment arrangements are due to expire
  • provide up-to-date 'market information' about employment trends
  • provide training and coaching to help them manage employees who may be working under a wider variety of work arrangements than before - the training/coaching may have to cover attitudinal changes as well as administrative/procedural ones
  • remove the doubts and rumours, eg where an employment policy or condition is popular and you do not intend to change it, say so right up front
  • answer questions from employees referred to HR by line managers promptly and truthfully.

Communicating with individual employees

Individual employees will generally want to know the following:

  • How do the legislative changes affect my employment conditions NOW?
  • How will they affect my employment conditions in the future?
  • When will changes, if any, be made?

As explained above, in most cases it will be 'business as usual' until 2010, so tell them what will NOT be changing for now. This is always worth reinforcing when there are organisation policies and employee entitlements that employees value highly. Where your initial compliance audit requires the need for changes, advise employees as soon as possible of both the changes to entitlements and any changes to administrative procedures, etc.

Recommended approach

A recommended approach is to hold initial meetings for each group of employees who are covered by awards or collective agreements to brief them on the basic changes. This meeting should cover:

  • what happens (if anything) to the existing employment instrument
  • how long it is due to remain in force - if this has changed, eg for a NAPSA, explain the change
  • any changes - additions, deletions and amendments - that have been made now
  • overview of the proposed changes in 2010, but pointing out that full details are not yet available.

Where unions operate at the workplace, ensure their representatives are informed of developments and consulted over the processes of implementing changes. Be aware of the legal source for implementing each change and be able to refer to it if required. This will also be helpful for answering employees’ questions.

Ensure copies of any amended employment instruments are accessible to employees.

AWAs

Where employees are under AWAs or some other form of individual contract, you should notify each employee individually of any changes that affect him/her, along similar lines to the above.

This may also be a good idea for each employee covered by a collective agreement, as more detailed information to back up the on-site meeting, but only necessary if there are any significant short-term changes. Otherwise, provide access to printed or online information and ensure line managers are equipped, as above, to answer employees’ questions.

Be proactive

As employees and line managers become more aware of the more substantial changes scheduled for 2010, they may start asking questions or begin lobbying for changes.

For HR, reacting to the changes should involve more than just making sure you are compliant as at 1 January 2010. You should study the proposed changes in detail and look for opportunities to make improvements that hopefully can benefit both parties. This process should commence NOW, not in December 2009. Some guidelines for taking a proactive approach will be provided in the next article in this series.


Related

Changes to WorkChoices: what HR needs to do now

Federal IR under Labor
 

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