Winners & losers under WorkChoices - an employee's perspective


Winners & losers under WorkChoices - an employee's perspective

With the commencement of the Regulations to WorkChoices on 27 March 2006, the impact that the WorkChoices legislation will have on the various categories of employees has become more clear


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With the commencement of the Regulations to WorkChoices on 27 March 2006, the impact that the WorkChoices legislation will have on the various categories of employees has become more clear. This will very much depend on the employee's individual circumstances. Although the Federal Government promised during the parliamentary debate on the Bill that no employee would be worse off under WorkChoices, it would appear that, in some instances, this may not be the case.

There are also circumstances, however, where some employees may receive benefits greater than enjoyed previously.

This article looks at some of the provisions under WorkChoices which may result in employees being 'winners' or 'losers'.

Less beneficial provisions for employees

Unfair dismissal: An employee will now be excluded from making an unfair dismissal application if at the time of the dismissal they were employed by a business with up to and including 100 employees.

Previously, an employee who successfully claimed to be unfairly dismissed could be reinstated to the same or similar position or receive, as compensation, a maximum of 6 months' pay.

Employees employed by an employer employing more than 100 employees have some protection from unfair dismissal, however, an employee can be fairly dismissed if the reason is due to 'operational requirements'. The Regulations to WorkChoices provide that any unfair dismissal application made by an employee prior to 27 March 2006 will be able to be heard by the relevant state industrial tribunal.

Unfair contracts: Unfair contract legislation exists in New South Wales and Queensland that allows an employee to challenge the conditions of their contract which may allow a dismissed employee, for example, to seek compensation when their contract of employment is terminated. WorkChoices specifically excludes such legislation, therefore, employees in these jurisdictions will no longer be able to access this remedy.

Note that the NSW Government has enacted legislation enabling the NSW Industrial Relations Commission to hear common law contract cases. How this extension of jurisdiction will play out is unclear at this stage.

Annual leave: The definition of 'ordinary pay' for the purposes of the annual leave standard under WorkChoices is calculated on the employee's base rate of pay.

This means that employees receiving bonus, commission or incentive payments will no longer have an entitlement to such payments when absent on annual leave. Many pre-existing federal and state awards and annual leave legislation in New South Wales, Queensland and Australian Capital Territory provide for the payment of an average of any bonus, commission or incentive payments that the employee received prior to going on annual leave.

Annual leave and ordinary pay: Under WorkChoices, the definition of an employee's ordinary pay for the purposes of annual leave is the employee's ordinary base rate of pay, excluding any penalties including shift penalties, allowances, and incentive payments, which includes bonus or commission payments.

This will affect the annual leave pay for occupations such as sales representatives, real estate agents, and possibly shift workers. Shift workers may still gain access to their shift penalties if the industrial instrument contains an annual leave loading clause. Such a clause usually provides for the payment of the relevant shift penalties or 17 1/2% loading, whichever is the greater.

Annual leave payment and casuals: There is conjecture as to whether those casual employees whose annual leave conditions are determined by the NSW Annual Holidays Act may suffer a pay reduction because this Act is an 'excluded state industrial law' under Work Choices and, therefore, no longer applies.

A casual employee under a NSW state award, in addition to their casual loading, usually receives an additional 1/12th of their casual rate to compensate for annual leave because of an entitlement under the Annual Holidays Act. Consequently, casual employees under NSW state awards may suffer a pay reduction of approximately 8.33 per cent if the Act is excluded from Work Choices.

At this stage, employers with casual employees under a NSW award should maintain the status quo until this isue is clarified. The federal government has indicated that it will make amendments to WorkChoices where there are some unintended consequences.

Casual employees employed under a NSW state award that provide an 'all up casual rate' will not be subject to any pay reduction as this rate is regarded as the appropriate award rate.

Wage increases: Several state and federal awards have received incremental or staged wage increases determined by the relevant federal or state industrial tribunal which apply post-commencement of WorkChoices. This usually involves two or three staged wage increases applicable from future operative date(s).

Employees under awards may not be entitled to these future wage increases unless the increase was determined by the relevant state or federal industrial relations commission and the basis of the decision in granting the wage increases was, wholly or partly, due to changes in work value or based on pay equity principles.

If the increases were granted as a result of, for example, the consent of the parties to a particular award, the award wage at the time WorkChoices commenced will be the relevant rate and the future staged wage increases will not be enforceable.

Staged future wage increases provided in a pre-existing federal or state agreement will continue to be applicable at the respective future operative date(s).

More beneficial provisions for employees

Personal/carer's leave: The WorkChoices standard of 10 days' paid leave per year with respect to personal/carer's leave is a more beneficial provision than most pre-existing federal and state award provisions, therefore, the Work Choices standard will override most existing award provisions.

Many non-award employees will now entitled to a minimum entitlement to personal (sick)/carer's leave. This will happen in those states and territories which do not have state or territory legislation bestowing personal/carer's leave as a statutory requirement.

Personal/career's leave and ordinary pay: In addition, the definition of ordinary pay for the purposes of paid personal/carer's leave is prescribed as the rate the employee would have received if they had worked, meaning a shift worker, for example, would receive their appropriate shift penalties for the period of paid personal/carer's leave. The common provision for ordinary pay in most pre-existing federal and state awards regarding personal/carer's leave is that the employee is entitled to receive their ordinary pay, exclusive of shift penalties.

Compassionate leave component: The compassionate leave provision prescribed under WorkChoices is a more beneficial entitlement than that usually provided under the relevant state employment legislation. As with personal/carer's leave, non award employees will now have an automatic entitlement to compassionate leave under WorkChoices, whereas, this may not have previously been the case. Depending on the particular award, most employees under existing federal or state awards will not receive any additional benefit from this WorkChoices standard.

Meal breaks: Work Choices provides that an employer cannot require an employee to work for more than 5 hours continuously without an unpaid interval of at least 30 minutes for a meal. This provision will mainly impact on non-award employees who, previously, have not been entitled to a statutory unpaid meal break.

Refusal to work on public holiday: Whilst industrial tribunals have previously determined that, in certain circumstances, an employee could rightfully refuse to work on a particular public holiday, WorkChoices now provides an employee with the statutory right to refuse such work provided the employee has reasonable grounds for refusing a request to work on a holiday.


WorkChoices regulations – what they mean for you 


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