Transition legislation — impact, coverage, actions required

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Transition legislation — impact, coverage, actions required

Source: Dick Grozier, Director of Industrial Relations, Australian Business Industrial The Labor’s first legislative step in its IR reform process is summarised here. A table showing effect of the transition legislation is at the end of the article.

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Source: Dick Grozier, Director of Industrial Relations, Australian Business Industrial

The Labor’s first legislative step in its IR reform process is summarised here. A table showing effect of the transition legislation is at the end of the article.

The Federal Government’s new transition legislation which commenced on 28 March applies to federal system employers. It does not apply to state system employers.

The main effect of the transition legislation is to:

  • end the making of AWAs and change the rules for making collective agreements
  • introduce a new form of transitional individual agreements (ITEAs) with new rules
  • end the requirement to give employees a copy of the Workplace Relations Fact Sheet.

Who are federal system employers?

An employer is under the federal system if the employer is:

  • incorporated so as to engage in trade or finance or with substantial trading or financial activities;
  • incorporated in another country; or
  • an employer of pilots, seamen or maritime workers engaged in cross-border activity.

Additionally, all other employers in the Australian Capital Territory, Northern Territory or Victoria are under the federal system. In some cases, slightly different rules apply to those other Victorian/territory employers. Commonwealth employers and some State Government employers are under the federal system.

What does transition legislation change; what needs to be done?

Employers no longer have to give out copies of the Workplace Relations Fact Sheet.

  • In most cases, employers can continue to employ as they have been. The transition legislation does not require an employer to alter any current employment practices (except handing out the Fact Sheet) unless the employer has been engaging new employees on AWAs. No new AWAs can be made.
  • Under the new rules, new agreements, or variations to agreements, are subject to a 'no-disadvantage test' (NDT). The NDT is assessed against relevant agreements, awards or NAPSAs, depending on the type of agreement. A new agreement, or variation, cannot leave employees disadvantaged overall against the comparison industrial instrument.
  • Where an employer does change an existing instrument the employer may wish to, or have to, terminate an existing agreement. There are different rules for this depending on the type of agreement, when and how it is being terminated.

Effect of transition legislation

The table below shows the effect continuing to employ under existing arrangements ('Do nothing') or what an employer who wants to alter employment arrangements is now able to do ('Action options'/ 'Requirements'). The table contains general guidance only and employers should seek specific advice about their own circumstances.

See explanation of Abbreviations used.
 

Industrial instrument Effect of transition legislation Do nothing Action options Requirements
Employer has at least one AWA (Australian Workplace Agreement) in effect as at 1 December 2007 Cannot vary existing AWA/make new AWA


Existing AWAs continue until terminated

Existing AWAs continue until terminated


New employees subject to:

applicable existing collective agreement/pre-reform certified agreement/ PSA/award/NAPSA

AFPCS + contractual terms (if award/agreement-free)

Make ITEAs with:
new employees
existing AWA covered employees

Terminate existing AWAs and allow existing collective agreement/pre-reform certified agreement/ PSA/ award/NAPSA to apply

Make new collective agreement
ITEAs subject to NDT

New collective agreement subject to NDT

Employer has no AWA (Australian Workplace Agreement) in effect as at 1 December 2007, but has made one or more AWAs after 1 December 2007


 
Cannot vary existing AWA/make new AWA

Existing AWAs continue until terminated


 
Existing AWAs continue until terminated
 
New employees subject to:
– applicable existing collective agreement/pre-reform certified agreement/ PSA/award/NAPSA
AFPCS + contractual terms (if award/ agreement-free)
Terminate AWAs and allow existing agreement/pre-reform certified agreement/PSA/
award/NAPSA to apply

Make new collective agreement

 

New collective agreement subject to NDT
ITEA (Individual Transitional Employment Agreement) Can make ITEAs with new employees and existing employees on AWAs if employer had one or more AWAs operating as at 1 December 2007

Can vary ITEAs with existing employees on ITEAs
 
ITEAs or variations to ITEAs cannot have nominal term beyond 31 December 2009
ITEAs continue until terminated or replaced Make ITEAs with new employees

Vary ITEAs with existing ITEA covered employees

Terminate ITEAs and allow existing agreement/pre-reform certified agreement/PSA/
award/NAPSA to apply

Make new collective agreement
ITEAs, variations to ITEAs subject to NDT

New collective agreement subject to NDT
Pre-reform certified agreement No direct impact (no new pre-reform certified agreements can be made) Pre-reform certified agreements continue until terminated or replaced Extend pre-reform certified agreement for up to three years or vary with a nominal term of up to three years

Replace pre-reform certified agreement with collective agreement

Terminate pre-reform certified agreement and allow existing PSA/award/NAPSA to apply
Extension only by agreement with no coercion from 13 February 2008

Variation only by agreement with no coercion from 13 February 2008 and subject to NDT

Termination by AIRC by agreement, as provided in agreement or unilaterally – subject to AIRC being relevantly satisfied
PSA (Preserved State Agreement) – may be collective or individual No direct impact on collective or individual PSAs (individual PSAs cannot be varied and no new PSAs can be made)

 

PSAs (collective or individual) continue until terminated or replaced Extend collective PSA for up to three years or vary with a nominal term of up to three years

Replace PSA (collective or individual) with new collective agreement

Terminate PSA and allow relevant existing collective agreement/pre-reform certified agreement/ PSA/
award/NAPSA to apply
Extension of collective PSA only by agreement with no coercion from 13 February 2008

Variation of collective PSA only by agreement with no coercion from 13 February 2008 and subject to NDT

New collective agreement subject to NDT

Termination by AIRC by agreement, as provided in agreement or unilaterally – subject to AIRC being relevantly satisfied.
Pre-reform award No direct impact (no new pre-reform awards can be made) Continues until replaced by modern award and NES (1 January 2010) Existing or new employees
– make collective agreement
vary contracts
 
If there was one or more employee under AWAs as at 1 December 2007, make ITEAs with new employees

 
New collective agreements are subject to NDT

Employment contracts cannot breach applicable agreements, awards/NAPSAs or the AFPCS

ITEAs are subject to NDT
NAPSA (Notional Agreement Preserving State Awards) No direct impact (NAPSAs cannot be varied and no new NAPSAs can be made) Continues until replaced by modern award and NES (1 January 2010) Existing or new employees
– make collective agreement
– vary contracts
 
If there was one or more employee under AWAs as at 1 December 2007, make ITEAs with new employees
New collective agreements are subject to NDT

Employment contracts cannot breach applicable agreements, awards, NAPSAs or the AFPCS

ITEAs are subject to NDT
Award/agreement free

 

No direct impact (AFPCS continues to apply)

New employees can be employed on contract

 

Continues until NES commences (1 January 2010)

 

Existing or new employees
– make collective agreement
– vary contracts

New employees
– make ITEAs (if there was one or more employees under AWAs as at 1 December 2007)
New collective agreements are subject to NDT

Employment contract cannot be less favourable than the AFPCS, breach legislation

ITEAs are subject to NDT

 

Abbreviations

AFPC    Australian Fair Pay and Conditions Standards (five minimum conditions - minimum rates of pay; maximum ordinary hours of work; parental leave; annual leave; personal leave (comprising personal/carer’s and compassionate leave) - an agreement or contract cannot give a less favourable result to an employee, and depending on transitional arrangements apply through pre-reform awards and NAPSAs.

AWA
    Australian Workplace Agreement (made before or after WorkChoices started).

ITEA
    Individual Transitional Employment Agreement (introduced with the transition legislation).

NAPSA
    Notional Agreement Preserving State Awards (the continuing form of State awards under the federal system - except for their pay rates, NAPSAs have remained frozen as at 27 March 2006).

NDT
    No-disadvantage test (introduced with the transitional legislation - to pass the NDT, an agreement must not result, on balance, in a reduction of the overall terms and conditions that would apply to the employee or employees under the comparisonindustrial instrument).

NES
    National Employment Standards. (There are 10 NES, which will come into effect on 1 January 2010 and apply to all employees in the federal system.) 'Modern awards' (which will also be introduced on 1 January 2010), agreements and contracts of employment cannot exclude any part of the NES, but a term of the NES may permit modern awards to modify in ways which are expressly provided).

Pre-reform award    Pre-reform award (the continuing form of pre-WorkChoices federal awards applying to employers in the federal system).

Pre-reform certified agreement    Pre-reform certified agreement (the continuing form in the federal system of certified agreements made before WorkChoices commenced - under the transition legislation pre-reform certified agreements may be varied (subject to the NDT) or extended for up to three years).

PSA    Preserved State Agreement (the continuing form of State agreements made before 27 March 2006, such as New South Wales enterprise agreements, under the federal system - PSAs have continued according to their terms since that time. PSAs may be individual or collective and under the transition legislation collective PSAs may be varied (subject to the NDT against the current form of the relevant state award) or extended for up to three years).

Transitional award    Transitional award (the form of federal award under WorkChoices that applies to a state system employer who was bound by a federal award prior to WorkChoices commencing. The terms and rates in a transitional award differ in some ways from the equivalent pre-reform award.)


Related

Federal IR under Labor

 

 

 

 

 

 

 


 

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