The new IR laws – employers will get what they want, eventually


The new IR laws – employers will get what they want, eventually

Employers will be able to set up the workplace conditions they want under the Federal Governments new IR legislation– they just may have to move a little slower than they might want to.


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Employers will be able to set up the workplace conditions they want under the Federal Governments new IR legislation – they just may have to move a little slower than they might want to. 

The Government’s explanatory notes on how the new legislation will work make it clear that penalty rates, overtime and inflexible hours can all be got rid of – over time. 

Unions will also find it almost impossible to take meaningful industrial action because if a significant strike is working, the Workplace Relations Minister will be able to declare it illegal under new essential services powers because it is ‘damaging the economy’. 

In the document, ‘WorkChoices – A New Workplace Relations System’ the Government repeatedly declares that certain employment conditions will be ‘protected’, only to reveal that they can in fact be bargained away. 

‘Protected’ award conditions 

Examples of employment conditions that will be ‘protected’, that can also be bargained away are:  

  • Public holidays;

  • Rest breaks (including meal breaks);

  • Incentive-based payments and bonuses;

  • Annual leave loadings;

  • Allowances;

  • Penalty rates; and

  • Shift/overtime loadings.

However it then goes on to say that these award conditions ‘can be the subject of bargaining by the employee/s and employer’. In fact, a collective agreement or AWA under WorkChoices ‘need simply set out how the new agreement will either change or remove these matters in that agreement’. 

The Government will retain a system of federal awards, but is setting up an Award Review Taskforce to simplify them and reduce their number. It has promised this will not be an exercise in ‘cutting award classification wages or conditions’. 

'Protected' means?

However when new workplace agreements are negotiated, these conditions are only ‘protected’ if they are not specifically referred to in the agreement. 

Any specific provision in the agreement will modify (or remove) them according to the terms of the agreement. 


The AIRC is to be significantly weakened. 

It will focus on its key responsibility – dispute resolution but only where those functions are expressly conferred on it by the parties.  

The AIRC will retain its power to resolve matters arising during the negotiation of an agreement.

Voluntary dispute resolution

The AIRC will no longer exercise compulsory powers of conciliation and arbitration, but will provide voluntary dispute resolution services with limited exceptions (such as terminating a bargaining period where industrial action is threatening life or causing damage to the economy).

Unfair dismissals

There are now clearer rules for the operation of the unfair dismissal laws. The cut off number of 100 employees is based on a head count (two part-time employees cannot be counted as one permanent) and casual workers employed for a total of 12 months or more are also included.

National IR system - coverage

Under the new national IR system WorkChoices will cover:

  • Trading, financial and foreign corporations (constitutional corporations);

  • Employers and employees in territories (the ACT and NT) and Christmas and Cocos Islands;

  • The Commonwealth, including its authorities;

  • Waterside, maritime and flight crew employers; and

  • All employers and employees in Victoria.

This is estimated to cover about 85% of employees.

People employed by employers not covered by the above categories remain in the state system ‘until ...  State Governments refer their workplace relations powers to the Australian Government’.

Non-incorporated employers have five years to decide what to do.  These options will depend, in part, on the positions taken by State governments. 

Hours of work

Maximum ordinary hours of work will be set at 38 hours a week, but can be averaged over a period of up to 12 months (In NSW award workers can currently have their hours averaged over 12 weeks, and seasonal workers over 52 weeks).

As far as overtime is concerned ‘additional payment for hours worked in excess of 38 hours will be a matter for awards and agreements’. In other words, workers will have to bargain for overtime rates – a difficult job if hours can be averaged over 12 months.

Penalty rates

Penalty rates, as stated above, will remain part of awards and agreements but can also be removed through bargaining an AWA or individual agreement. Of course, if an AWA is a condition of employment then employee’s bargaining powers are diminished.

In a Government example in the document, an employer offers her employees an hourly rate which ‘absorbs’ penalty rates. 

The new Fair Pay and Conditions Standard will provide that employees can be required to work reasonable additional hours. 

Cashing out annual leave 

Employees will be able to cash out two weeks of their annual leave, but it must be at their written request. Employers will be able to refuse such a request. 

Personal/carers leave 

Personal/carer leave (including sick leave) will be 10 days paid leave a year. It will be cumulative, but only up to 10 days a year can be used as carers leave.

Parental leave 

Employees will be entitled to up to 52 weeks parental leave after 12 months’ continuous service. It also applies to casual workers with 12 months’ service with a ‘reasonable expectation of ongoing employment’. 

Agreement making

The current need to have agreements certified is to be abolished. In future a statutory declaration that the agreement was negotiated in compliance with the law will be all that is necessary.  

All agreements will commence on lodgement. Employers and employees can ask the OEA to check whether the agreement does not contain prohibited content. 

Employers will be required to give their employees at least seven days to consider new agreements. However this period can be waived if all employees agree in writing.

Types of agreement 

There will be six types of agreements:

  1. Employee collective agreements (non union)

  2. Union collective agreements

  3. AWAs

  4. Union greenfields agreements – where a union negotiates wages and conditions for future employees they would expect to cover.

  5. Employer greenfields agreements – where the employer makes the agreement without union involvement. It is not clear with whom the employer could be making an agreement, as there are no employees yet.

Both kinds of greenfields agreements automatically expire after 12 months, after which protected industrial action can begin in support of a new agreement. Mining and energy employers are understood to be particularly unhappy about this, as they wanted the greenfields agreement to be in operation for the life of a construction project. However this would go against the Government’s philosophy of workplace agreements negotiated between employers and employees.


  1. Multiple business agreements – which are mainly aimed at franchises and would provide the same pay and conditions for a number of businesses. These must be shown not to be against the public interest.

Agreement content 

Agreements must include wage rates that are not less than those set by the Fair Pay Commission. 

The casual loading of 20% remains for time being (subject to future consideration of the Commission). 

Agreements can be for a maximum of five years. 

Prohibited content

Clauses that cannot be included in  agreements are those:

  • Prohibiting AWAs;

  • Restricting the use of independent contractors or on-hire arrangements;

  • Allowing for industrial action during the term of an agreement

  • That provide for trade union training leave, bargaining fees to trade unions or

  • paid union meetings;

  • Providing that any future agreement must be a union collective agreement;

  • Mandating union involvement in dispute resolution;

  • Providing a remedy for unfair dismissal;

  • Other matters proscribed by regulation/legislation

Also prohibited are agreements which impose wage rates or conditions on contractors or labour hire companies working on site. This is expected to have major ramifications in the construction industry where such action is commonplace. 

The new IR laws will make prohibited content unenforceable, but its inclusion will not render the agreement invalid. As well employers, unions and employees will not be able to take protected industrial action over agreements that include prohibited content. 

Award provisions in excess of standard

Award provisions which are more generous than the Fair Pay and Conditions Standards – such as annual leave will continue to apply. 

The Government document says Victorian nurses who are entitled to six months long service leave after 15 years service will continue with this condition as long as they are ‘covered by the award’. 

Presumably these matters are also up for negotiation if employees move to agreements in the future.

Transitional arrangements

An agreement in place at the commencement of WorkChoices will continue past its expiry date until terminated or replaced. However the old agreement will not be able to be varied or extended.

Parties can make new agreements before the expiry of the old one.

Relationship between agreements

AWAs will exclude both collective agreements and awards.

Collective agreements will exclude awards, but will not be able to exclude AWAs.

Awards will be excluded by both AWAs and collective agreements

Agreement dispute resolution

Employers and employees will be encouraged to resolve disputes between themselves. However the legislation will include a model dispute resolution process which will set out a staged process. 

If the matter is unresolved, the parties can move to an alternative dispute resolution process, which can be a private provider or the AIRC. This process will not prevent the parties taking court action if they believe laws, awards or agreements are being breached. 

Under the new laws the AIRC will be compelled to hear and determine an application for an order to prevent or stop unprotected industrial action within 48 hours.

In relation to the definition of industrial action, the WR Act will be amended to:

  • Clarify that acts by employers, other than lockouts, are not industrial action (eg.redundancies or termination of employment);

  • Clarify that absences from work for non-industrially motivated purposes, (eg. genuine illness, is not industrial action); and

  • Require employees to show that they genuinely held a reasonable concern about an imminent risk to their health or safety in order to rely on that exemption from the definition of industrial action.

It will no longer be necessary to get a certificate from the AIRC before having access to common law tort remedies for unprotected action.

Secret ballots

The WR Act will be amended to require secret ballots before protected industrial action can be taken.  

Employees or the union or unions will apply to the AIRC for a secret ballot order.   

An application for a secret ballot will only be able to be made:

  • After the expiry of the existing agreement;

  • If a bargaining period has been notified to the AIRC; and

  • If the proposed industrial action is not for the purposes of supporting or advancing claims to include prohibited content in the proposed agreement.

The AIRC will only be able to make such an order if the ‘employees or union are genuinely trying to reach an agreement with the employer and if not pattern bargaining is taking place’. 

To approve the industrial action at least 50% of the eligible employees will need to vote and, of them, more than 50% will need to vote in favour. 

In another blow to unions, the Federal Government will cover only 80% of the cost of the ballot, with the rest paid by the union or the group of employees. 

It is expected that secret ballots could take weeks to organise, further restricting union activity

Suspending and terminating a bargaining period

Three new grounds will be added, including harm to ‘third parties’: 

  • Suspension or termination if “pattern bargaining” is taking place;

  • A cooling-off suspension where this would assist the parties to resolve the matters at issue; and

  • A suspension where third parties are threatened with significant harm from industrial action.

The length of suspension where third parties have sought it is limited to three months.

Essential services

The Minister for Employment and Workplace Relations will have the power to prohibit or end protected industrial action where it ‘threatens life, personal safety, health or welfare of the population or is likely to cause significant damage to the economy’.

Damaging action in  State systems

Industrial action in State systems that is having an adverse effect on a constitutional corporation can also be dealt with by way of civil penalties and injunctions, with fines of up to $33,000. These penalties are being reviewed.

Transmission of business

Where a business or part of a business transmits to a new employer, if no employee accepts employment with the new employer, then the awards or agreements will not transfer to the new employer.

Where an employee does accept employment with the new employer, the awards, collective agreements and AWAs that cover the employees of the transferring business will transmit to the new employer.

The transmitted awards, collective agreements and AWAs will only apply to the transferred employees at the new business.

Collective agreements and AWAs transmitted to the new employer, as well as award provisions will have a maximum period of application of 12 months.  

After that period, the employees will be covered by whichever of the instruments is capable of applying to them (eg. the employer’s existing collective agreement or relevant award) or, if there is no such instrument, the Fair Pay and Conditions Standard.

No ticket, no start

Claims of ‘no ticket, no start’ will be prohibited as ‘misleading’ because they claim that a person cannot be employed if he/she is not a union member.

Right of entry

Much of what employers have been demanding over union officials ‘right of entry’ onto employer’s premises have been granted.

The new provisions will:

  • Tighten the requirements for the granting of an entry permit, including introducing a ‘fit and proper person’ test; 

  • Cover the field using the corporations and territories powers so that for businesses in the new system, right of entry can only be exercised under the new legislation;

  • Make it clear there is no right of entry for discussion purposes where all employees are on AWAs;

  • Only allow entry to investigate a breach of an AWA if the employee party to the AWA provides written consent;

  • Require a union official to provide particulars of a breach that he or she is proposing to enter to investigate to the employer;

  • Confirm a union official can only access the records of union members when investigating a breach, unless an order is made by the AIRC that non-member records can be inspected; and

  • Require a union official to comply with a reasonable request by an employer that the meeting or interview should be conducted in a particular room or areas of the premises and that a specified route should be taken to that venue.

Revocation and suspension

The grounds on which a right of entry permit may be revoked will also be expanded.  

The revocation or suspension of a permit will be mandatory in cases where the permit holder has:

  • Been found by the AIRC to have breached the prohibition on making misrepresentations about his or her powers under their right of entry permit;

  • Had their right of entry under a state law cancelled, suspended or has been disqualified from exercising or applying for right of entry under a state law;

  • Been ordered to pay a penalty in respect of a contravention of the right of entry provisions; and

  • When exercising a right of entry under an Occupational Health and Safety (OHS) law engaged in conduct that was not authorised by that law.

Detailed document

The full WorkChoices document can be found here.


Federal IR changes 2005  


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