Wages/conditions  & WorkChoices Bill

Analysis

Wages/conditions & WorkChoices Bill

What does the proposed WorkChoices legislation mean for: minimum wages; hours of work; current awards and agreements; the AIRC; award reviews; and State jurisdictions? There is some uncertainty as to the method by which wage increases will occur under the Federal Government's proposed workplace relations legislation (including the proposed federal minimum wage) and the future role of awards (both state and federal) under the proposed federal workplace relations legislation.

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What does the proposed WorkChoices legislation mean for: minimum wages; hours of work; current awards and agreements; the AIRC; award reviews; and State jurisdictions?

There is some uncertainty as to the method by which wage increases will occur under the Federal Government's proposed workplace relations legislation (including the proposed federal minimum wage) and the future role of awards (both state and federal) under the proposed federal workplace relations legislation. In addition, there is doubt as to whether award wages and conditions will be varied at all, and, if so, by which legislative authority.

Another complication is the Federal Government's decision to continue to use the corporations power under the Australian Constitution. A consequence of this decision is that not all employers are covered by the proposed federal system, which may complicate matters for employers in certain industries, such as the farming sector and the retail pharmacy sector.

Minimum wage - weekly and casual

The proposed legislation sets a minimum wage of $12.75 per hour ($484.50 per week) for all full-time and regular part-time employees, based on a 38 hour week. In addition, it provides a guaranteed default casual loading of 20%, which equates to a minimum casual rate of $15.30 per hour. Where applicable, the guaranteed casual hourly rate is payable for all hours worked, including hours worked beyond 38 in a particular week.

Casuals

An individual casual employee's guaranteed casual loading percentage would depend on whether the employee's basic periodic rate of pay is determined by an APCS (a current award), a workplace agreement or the Federal Minimum Wage (FMW).

The guaranteed casual loading percentage would be:

  • for a casual employee whose basic periodic rate of pay is determined by an APCS - not less than the casual loading percentage payable to the employee under the APCS;
  • for a casual employee whose basic periodic rate of pay is determined by a workplace agreement - the default casual loading percentage, ie. 20%;
  • for a casual employee whose basic periodic rate of pay is the FMW - the default casual loading percentage, ie. 20%.

This means that while an employee remains under an award which prescribes a casual loading, the employee is guaranteed a casual loading percentage prescribed by that award. If an employee negotiated a workplace agreement with their employer, the employee would be guaranteed the default casual loading percentage as part of the Minimum Standard. If the workplace agreement was subsequently terminated, the employee would be guaranteed the casual loading percentage prescribed by the award. The guarantee of casual loadings, however, does not apply to a casual employee covered by an award if that award does not contain an applicable casual loading provision, and the casual employee is not covered by a workplace agreement.

Juniors, apprentices, employees with disabilities

The Fair Pay Commission will set and adjust minimum and award classification wages, minimum wages for juniors, trainees/apprentices and employees with disabilities, minimum wages for piece workers and casual loadings.

All employees

The guaranteed minimum wage rates apply to all workers throughout Australia who are employed by a 'constitutional corporation', ie. a company. The proposed legislation will not apply to those employees who are employed by other legal entities, such as trusts, sole traders, partnerships, etc.

Hours of work

The proposed legislation prescribes a maximum ordinary hours of work of 38 hours per week. It will be possible for ordinary hours to be averaged over a period of twelve months.

Additional payment for hours worked in excess of 38 hours will be a matter for awards and agreements. Penalty rates will remain part of awards and agreements.

Ordinary hours of work will remain an allowable award matter. Awards may provide for fewer than 38 hours as ordinary hours, but will no longer be able to provide for ordinary working hours above 38 hours per week.

The Fair Pay and Conditions Standard also provides that an employer may require an employee to work reasonable additional hours.

Current awards

Those employers and organisations currently bound by awards will continue to be bound. Employees of constitutional corporations whose employment is subject to the award will also be bound. Minimum and award classification wages will be at the level set after the inclusion of the increase from the Australian Industrial Relations Commission's 2005 Safety Net Review. Minimum and award classifications will not fall below this level and will be subject to future variation by the Fair Pay Commission.

The current system of federal awards will continue to apply for the time being, however, all awards, including state awards (referred to as notional agreements) will ultimately be reviewed by the Award Review Taskforce, which will examine each award for the purpose of rationalising, reviewing and simplifying awards.

Award provisions which are more generous than the Fair Pay and Conditions Standard (federal minimum wage, hours of work, annual leave, personal/carer's leave, and parental leave) will continue to apply, however, an award (including a previous state award) that provides for an entitlement less than the minimum conditions under the Australian Fair Pay and Conditions Standard, is not enforceable, with the federal standard applying to that particular condition.

Current agreements

An agreement in place at the commencement of the legislation (including a transitional state agreement) will continue to operate beyond its nominal expiry date until terminated or replaced. These old agreements may be terminated after their nominal expiry date using the termination provisions which currently apply.

It should be noted that the minimum conditions provided under the Australian Fair Pay and Conditions Standard, ie. federal minimum wage, annual leave, hours of work, personal/carer's leave, and parental leave, do not apply to a current federal certified agreement or a previous state agreement where the agreement prescribes a lesser condition than the Standard.

Protected and allowable award provisions

Apart from the guaranteed minimum conditions regarding the minimum wage, annual leave, ordinary hours of work, personal (sick) leave, and parental leave, there will be other award conditions, referred to as 'allowable award matters', which will still apply unless otherwise specified by an agreement.

These allowable award matters include:

  • ordinary time hours of work and the time within which they are to be performed, rest breaks, notice periods (not notice of termination) and variations to working hours;
  • incentive-based payments and bonuses;
  • annual leave loadings;
  • ceremonial leave;
  • observance of days within a State or Territory as a public holiday, and entitlements of employees to payment in respect of those days;
  • monetary allowances for - expenses incurred in the course of employment, eg. fares and travelling allowance, living away from home allowance, locomotion allowance;
  • responsibilities or skills that are not taken into account in rates of pay for employees, eg. leading hand allowance, qualifications allowance, first aid allowance; disabilities associated with the performance of particular tasks or work in particular conditions or locations, eg. special rates for hot work, confined space, height money, wet work, cold work;
  • loadings for working overtime or for shift work;
  • penalty rates;
  • redundancy pay, except where the employer employs less than 15 employees; and at the initiative of the employer and on the grounds of operational requirements, or because the employer is insolvent;
  • stand-down provisions;
  • dispute settling procedures, where it complies with the model dispute resolution process;
    type of employment, such as full-time employment, casual employment, regular part-time employment and shift work;
  • conditions for outworkers, but only to the extent necessary to ensure their overall conditions of employment are fair and reasonable in comparison with the conditions specified in a relevant award for the same kind of work at that workplace, except with respect to pay.

Australian Industrial Relations Commission (AIRC)

The AIRC will retain certain existing powers to vary awards (including to remove uncertainty or ambiguity, remove discriminatory provisions and to reflect changes in the names of organisations or persons bound by an award) and can only otherwise vary an award as part of the award rationalisation process, award simplification, or where the variation is considered to be essential and necessary to the maintenance of a minimum award safety net.

The AIRC will not be able to vary or adjust non allowable matters in existing awards, eg. long service leave, superannuation, notice of termination and jury service). Any new awards will not be able to contain these non-allowable matters.

Award free employees, employees and certain new organisations entering from state systems will be able to apply to the AIRC to be bound by a federal award. A more detailed summary of the role of the AIRC under the new system will be the subject of a separate commentary in the near future.

Award Review Taskforce

The proposed legislation refers to a body called the 'Award Review Taskforce' (ART). It will be charged with the task of recommending to the government an approach to rationalising awards. The Minister will then, having regard to this advice, task the AIRC with the job of rationalising awards. The ART will consider:

  • the extent to which awards can be amalgamated/combined to avoid overlapping of awards and to minimise the number of awards applying in relation to particular employers;
  • any customs or arrangements currently in state awards that should be reflected in the rationalised federal awards;
  • the manner in which the preserved award entitlements are to be provided for in the awards that result from the rationalisation process;
  • whether preserved award entitlements currently contained in state awards are to be treated in the same way as proposed federal awards;
  • whether some awards should be deleted;
  • how award rationalisation can be coordinated with award simplification (reducing the number of matters in awards) - eg. whether it may be preferable to reduce the number of awards before simplifying them, taking into account the government's decision to preserve certain non-allowable matters; and
  • the scope for subsequent rationalisation of awards beyond the industry sector level.

The Award Review Taskforce is expected to report to the Minister for Employment and Workplace Relations on its recommended strategy by the end of January 2006. The terms of reference of the ART will be the subject of a separate commentary in the near future.

State jurisdictions

All employees of constitutional corporations currently covered by state industrial relations systems will move into the federal system. The terms of former state awards and agreements will become enforceable under the federal system as transitional agreements. Existing wages and conditions in former state awards and agreements will remain unchanged.

Whilst it is the Government's intention to introduce one national workplace relations system, this is not possible as the 'corporations powers' of the Australian Constitution is the basis of the proposed legislation. Because of this, certain categories of employees will be exempt from the federal system, including 'crown employees' ie. state and federal government employees, and employees of non-constitutional corporations, such as trusts, sole traders and some partnerships.

Employers who are non-constitutional corporations and their employees currently in the national system (through respondency to a federal award by membership of a registered organisation or respondent to a federal award) will have the existing federal awards and agreements continuing to apply for a period of five years, after which, it is presumed, the minimum conditions of employment will revert to the relevant state or territory award.

Related

Analysis of Federal Workplace Relations Amendment (WorkChoices) Bill 2005

 

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