Transitional IR arrangements — July to December 2009 — notes for employers

Analysis

Transitional IR arrangements — July to December 2009 — notes for employers

There are issues for employers to consider as a consequence of the passing of the Fair Work (Transitional and Consequential Amendments) Act 2009, particularly regarding issues relating to the impact on existing industrial instruments and current workplace agreements, both individual and collective agreements.

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There are issues for employers to consider as a consequence of the passing of the Fair Work (Transitional and Consequential Amendments) Act 2009, particularly regarding issues relating to the impact on existing industrial instruments and current workplace agreements, both individual and collective agreements.
 
This Act sets out the rules that will apply to employers and employees who transit from the previous Workplace Relations Act (WRAct) to the new Fair Work Act (FWAct).
 
Some employers have indicated an aversion to doing anything until 1 January 2010, when the new Fair Work system is fully operational in all its aspects, while other employers had already negotiated individual or collective agreements prior to the change in legislation as ‘a precaution’.
 
Most of the ‘transitional arrangements’ are obvious, dealing with the preservation of existing and accrued employee entitlements. However, other matters may require more detailed explanation, particularly rules relating to existing agreements.
 
A related article will publish soon on the changes coming into effect from 1 January 2010 — ie the effect of NES/modern awards on existing agreements.
 
Relevant legislation relating to the Fair Work regime can be seen here
 
Continuation of industrial instruments
 
The Transitional Act (TA) provides that all instruments under the WRAct will continue as ‘transitional instruments’, until terminated or replaced by an instrument under the FWAct.
 
Pre-reform federal awards and NAPSAs are referred to as ‘award-based transitional instruments’, and all pre-existing individual and collective agreements are now referred to as ‘agreement-based transitional instruments’.
 
Award-based transitional instruments will continue in their current form until the introduction of modern awards on 1 January 2010, while existing Australian Workplace Agreements (AWAs), Individual Transitional Employment Agreements (ITEAs), and collective agreements will continue to operate until terminated or replaced. It will not be possible for an employer and an employee to enter into an ITEA after 31 December 2009.
 
Agreement-based transitional instruments
 
The TA sets out rules governing matters such as the variation and termination of existing agreements, the passing of the ‘no disadvantage test’ (rather than the Better Off Overall Test [BOOT]), and the impact of the new FWAct on existing bargaining arrangements.
 
Variation of agreements
 
An agreement-based transitional agreement can be varied in the following circumstances:
  • to remove ambiguity or uncertainty,
  • resolve an uncertainty or difficulty about how they interact with a modern award, and
  • remove terms that are inconsistent with the general protections.
Termination of collective agreement-based transitional instruments
 
These will be able to be terminated either with the agreement of the majority of employees, or by Fair Work Australia on application after the nominal expiry date if it is not contrary to the public interest.
 
Termination of an individual agreement-based transitional instrument
 
This term is referring to an Australian Workplace Agreement, a pre-reform Australian Workplace Agreement, an Individual Transitional Employment Agreement, and an Individual Preserved State Agreement.
 
These agreements may be terminated by an employer and employee by agreement, through signing a termination agreement and lodging it with Fair Work Australia. Termination takes effect when approved by Fair Work Australia (FWA). Where the agreement has passed its nominal expiry date, it can be terminated unilaterally by either party giving at least 14 days’ notice before applying to Fair Work Australia. The termination takes effect 90 days after Fair Work Australia approves it. These agreements can be terminated conditionally on an enterprise agreement which covers the employer and employee coming into operation unilaterally (if it has passed its nominal expiry date), or by agreement (if it has not passed its nominal expiry date).
 
Entering a conditional termination may be appropriate where an individual agreement has not passed its nominal expiry date, because it allows the employee to participate in bargaining for an enterprise agreement, be covered by a protected industrial action ballot, vote on an enterprise agreement, or have the enterprise agreement apply to the employee (although it can cover the employee). The conditional termination will terminate the individual agreement when the enterprise agreement comes into operation. Otherwise, an employee covered by one of these individual agreements can only participate in bargaining if it has passed its nominal expiry date.
 
Pre-reform certified agreements/preserved state agreements
 
The TA continues to allow a party to a pre-reform certified agreement or preserved state agreement to make application to Fair Work Australia (FWA) to vary the agreement, or extend the agreement’s nominal expiry date for up to three years from the variation.
 
The rules allowing the extension of a CA or PSA’s nominal expiry date will continue to operate until 31 December 2009, after which applications will no longer be accepted.
 
Agreements made from 1 July 2009
 
Rules govern some important aspects of agreement-making during the ‘transitional period’ between 1 July and 31 December 2009. These rules include the issues noted below.
 
Bargaining
 
The TA provides that if the parties had not made a workplace agreement by 30 June 2009, they will need to start bargaining again in the new Fair Work system.
 
This means that an employer continuing to bargain after 1 July 2009 will need to serve notices of employee representational rights, while a union/employees wishing to take protected industrial action will need to go through a new secret ballot process authorising the action.
 
No disadvantage test
 
If an agreement is lodged with Fair Work Australia between 1 July and 31 December 2009, the agreement will be subject to the ‘no disadvantage test’, the test that applied to agreements under the WRAct. That test is a comparison against the conditions of the applicable pre-reform federal award, NAPSA or registered agreement, and the Australian Fair Pay and Conditions Standard.
 
The reason for this is because the National Employment Standards (NES) and modern awards will not come into operation until 1 January 2010. The Better Off Overall Test (BOOT) will apply to agreements lodged with Fair Work Australia from 1 January 2010.
 
The Standard
 
The WRAct referred to those minimum employment conditions with respect to annual leave, maximum weekly number of hours, personal/carer’s leave (including compassionate leave), and parental leave as the Australian Fair Pay and Conditions Standard (the ‘Standard’).
 
Under the FWAct, these minimum conditions of employment will continue to apply to all employees up until 31 December 2009, when the minimum conditions under the NES will operate.
 
Other minimum conditions prescribed by the WRAct, such as public holidays and minimum periods of notice of termination to be given by the employer, will also continue to apply up until 31 December 2009, when such employment condition will revert to the NES.
 
As referred to above, the minimum provisions of the Standard continue to form part of the ‘no disadvantage test’ for the purposes of certifying a collective agreement under the FWAct.
 
Source: Paul Munro, IR Consultant.
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