WorkChoices developments - High Court decision, records keeping and other changes


WorkChoices developments - High Court decision, records keeping and other changes

This week has been a big one for industrial law in Australia. The High Court has upheld the constitutional validity of the WorkChoices legislation and the Federal Government announced some important changes to be made to the legislation.


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This week has been a big one for industrial law in Australia. The High Court has upheld the constitutional validity of the WorkChoices legislation and the Federal Government announced some important changes to be made to the legislation.

High Court decision

On 14 November the High Court handed down its decision on the challenges to the WorkChoices legislation which were brought by each of the States, Unions NSW and the AWU and AWU Queensland. Between the various applicants a number of different questions were raised.

The High Court upheld the legislation on all these issues by a majority of 5:2. That is, no part of the WorkChoices legislation was found to be invalid.

Implications for employers

This ruling has two major implications for employers and employees in their workplaces:

  • Because the High Court has upheld the legislation there will not be any amendments needed, or made, to the present WorkChoices legislation to correct any invalidities.
  • The expansion of the national system made by WorkChoices will not be wound back and over time the national system will become more important. Both the current Federal Government and the Federal Opposition support a national system. (Obviously the Federal Opposition has different views about what a national system should be like). Victoria has already referred its industrial powers to the Federal Government which means that all Victorian private sector employers are in the national system now. Over time, and subject to political circumstances, other States can be expected to reconsider referral of powers in the same way.

Record keeping

The Federal Government has extended the moratorium on breaches of the record keeping and pay-slip regulations until 26 March 2007.

On 13 November the Government announced that it would streamline the record keeping obligations under WorkChoices to require more nearly what was required prior to WorkChoices starting.

The detailed amendments are not yet available (and until they are replaced, the current regulations still apply). The Government has said that the streamlined records will need to be sufficient to show compliance with the Standard and any applicable industrial instrument.

An employer will still be required to keep records which:

  • retain any agreement allowed under the Standard (such as an election to cash-out leave or averaging hours)
  • allow each employee's basic pay rate or piece rate to be determined
  • allow protected award conditions (penalties, loadings, allowances, incentives etc) to be determined
  • show leave accrual, taken and balance
  • show hours for which an employee is entitled to overtime or other penalty rates, and
  • show superannuation contributions

Streamlined hours records seem likely to be focused on those hours which attract penalty rates, except for irregular employees (casuals or irregular part-time employees), for whom full hours records will still be required.

The government has also announced that pay-slip requirements will be changed to fit in with the new record keeping requirements.

Until the detail of the changes is known employers should continue to ensure they keep records of employees' entitlements and employees receiving their entitlements.

Other changes

The government also announced a number of other changes to WorkChoices. Again, the detail of the changes is not yet available.

Redundancy Entitlements

Under WorkChoices, agreements (pre-reform certified agreements, pre-reform AWAs, preserved State agreements and workplace agreements made under WorkChoices) apply until they are formally terminated or replaced by a new workplace agreement (collective workplace agreements or AWAs made under WorkChoices). Termination may be by agreement or by one party only.

The Government has announced that where an agreement is terminated by one party its redundancy provisions will continue to apply to employees who were covered by the agreement at the time it was terminated, and to all the other parties to the agreement, for a period of 12 months following the termination of the agreement ('preserved redundancy entitlements').

'Preserved redundancy entitlements' will transmit to the new employer for an employee who transfers across. 'Preserved redundancy entitlements' can be replaced at any time by a new workplace agreement.

Stand down of employees

The right to stand employees down without pay comes from formal industrial instruments or laws - it is not a general right. WorkChoices currently does not have a process for making a stand-down order. This means that unless there is such a provision in an award, NAPSA or formal agreement an employer cannot stand employees down when, for reasons which are beyond the employer's control, work is unavailable.

The Government has announced that it will provide a process for standing down employees who cannot be usefully employed. It is understood that the change will mean that, where there is no stand-down provision in an industrial instrument covering the employees, the Federal Commission will be able to hear applications for stand-down orders (in rather the same way that the NSW Commission can hear applications under the NSW Industrial Relations Act 1996).

Capping leave accrual rates and clarifying 'pay'

Under the Standard an employee's entitlement to paid annual and personal/carer's leave is derived from the number of 'nominal hours' worked by an employee in each four week period.

'Nominal hours' are based on the employee's 'specified hours' and there has been confusion about whether 'specified hours' includes regular additional hours such as rostered overtime and whether these additional hours feed into the entitlement to paid leave.

The Government will be amending the Act to make clear that these paid leave entitlements accrue on the basis of ordinary hours (which under the Standard is a maximum of 38 hours, or an average 38 hours, per week).

The Standard also has different definitions of minimum pay for an employee on annual leave compared with paid personal leave. The amendments will change the definition of 'pay' which applies to paid personal leave to that which applies to annual leave under the Standard (the employee's basic rate of pay).

The change means that 'pay' for personal leave under the Standard will be similar to the pay entitlement when on paid sick, carer's or compassionate leave under all, or nearly all, awards or NAPSAs.

The same definition of 'pay' will also apply under the parental leave Standard, that is, when a pregnant employee cannot be transferred to safe work and is put on leave as a consequence.

Cashing out untaken personal/carer's leave

Prior to WorkChoices some Federal awards and State awards (in some States) provided for cashing out untaken sick leave over a certain amount, or perhaps for the automatic cashing out of a proportion of untaken sick leave each year. The Standard prohibits cashing out untaken personal/carer's leave (leave which can be used for sick leave or carer's leave) which is accrued under the Standard.

The government will amend the Act so that cash-out arrangements for personal/carer's leave accrued under the Standard will be possible provided that a minimum of 15 days' paid personal/carer's leave (for full-time employees, and proportionately for part-time) remain after the cashing out.

* Australian Business Industrial is the registered IR entity of Australian Business Limited/State Chamber. The Chamber is a employer/member-based association and it provides comprehensive information about wages, allowances and hourly rates in many Federal and State awards.


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