Which conflicting employment condition applies?

Analysis

Which conflicting employment condition applies?

Although recent federal governments have indicated their preference for a national workplace relations system, there are still a number of areas where employers are confused as to whether a state or territory jurisdiction still applies in certain circumstances or what condition of employment is enforceable where two sources of legal obligation appear to cover the same circumstance.

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Although recent federal governments have indicated their preference for a national workplace relations system, there are still a number of areas where employers are confused as to whether a state or territory jurisdiction still applies in certain circumstances or what condition of employment is enforceable where two sources of legal obligation appear to cover the same circumstance.

This article explains the reasons why certain employment conditions override similar or identical conditions in other jurisdictions.

Unfortunately, the introduction of WorkChoices has not eradicated this problem for many employers. Where such a conflict of law occurs, an employer may choose the more beneficial entitlement to avoid a possible underpayment, although this may not be always necessary from the employer’s perspective.

WorkChoices Standard vs other employment provisions

The application of the Standard versus the identical employment condition in an industrial instrument or contract of employment continues to create difficulties for some employers.

Summary

In the case of a pre-reform federal award, NAPSA or state or territory employment statute, the Standard usually overrides the relevant employment condition unless the provision in the federal award, NAPSA or state or territory statute is more favourable to the employee.

In the case of a pre-WorkChoices agreement, eg pre-reform federal certified agreement or preserved state agreement, the Standard only applies where the terms and conditions of the agreement do not deal with one of the five matters contained in the Standard. In addition, the Standard only applies to the extent that the agreement does not deal with the matter contained in the Standard. For example, a pre-WorkChoices agreement that does not provide annual leave would be subject to the minimum annual leave provisions of the Standard.

The information below summarises the ‘more favourable outcome’ test with respect to each of the relevant employment conditions of the Standard and the other minimum employment conditions prescribed by the Workplace Relations Act.

Casual loading and entitlements

The casual loading prescribed by the relevant Australian Pay & Classification Scales (APCS) will continue to apply, even where the loading is less than the ‘default’ casual loading (20 per cent) prescribed under the Standard.

Where a casual employee was entitled to a condition prior to WorkChoices through a statute or a provision of a pre-reform federal award (including a common rule award) or NAPSA, the condition will continue to apply despite a contrary provision in the Standard. For example, a casual employee under some APCS that apply to employees under NSW NAPSAs and some pre-reform Victorian awards provide pro rata annual leave to casual employees (usually an additional one-twelfth of the casual hourly rate). Although the annual leave provision under the Standard does not apply to casual employees, this provision will continue to apply to casual employees in receipt of that benefit.

Hours of work

The Standard provides a maximum number of weekly hours of 38 per week, plus reasonable additional hours. However, this does not apply where a pre-reform federal award or NAPSA prescribes maximum ordinary weekly hours of work. For example, a federal award or NAPSA that provides a 40-hour week will continue to apply and is not overridden by the more generous provision of the Standard.

Hours of work will be a matter that can be dealt with by a modern award, which is anticipated to commence from 1 January 2010.

The Standard also applies to non-award employees.

Annual leave

The Standard provides for four weeks annual leave per year, with an additional week’s leave for a seven-day shift worker. A provision in a pre-reform federal award, NAPSA or state/territory employment statute that prescribes an amount of annual leave in excess of four weeks per annum will override the Standard as the annual quantum of leave is greater than that prescribed by the Standard, otherwise the Standard will prevail.

Personal or carer’s leave

The Standard will override any personal or carer’s leave provision in a pre-reform federal award, NAPSA or state or territory statute that provides 10 days paid leave per year, or less.

However, the provision applies to each individual employee’s circumstance. For example, the Insurance Industry Award 1998 (a pre-reform federal award) provides personal or carer’s leave on the basis of eight days in the first year, 10 days in the second year and 12 days for the third and subsequent years of service with the employer. This means an employee would be covered by the Standard for the first two years of service, but would revert to the award provisions for the third and subsequent years of service. This is because the personal or carer’s leave provisions in the third and subsequent years of service are more favourable to the employee than the Standard.

Compassionate leave

The compassionate leave provision under the Standard (two days paid leave per each permissible occasion) will override any similar provision (compassionate or bereavement leave) in a pre-reform federal award or NAPSA regardless of the quantum of leave prescribed. Some pre-reform federal awards and NAPSAs provide for three days paid compassionate or bereavement leave, however, this provision is unenforceable, meaning the employer need only provide two days paid leave in this instance. However, an employer may apply the more favourable provision in a pre-reform federal award or NAPSA without penalty.

Parental leave

The Standard will override any provision of a pre-reform federal award, NAPSA or state or territory statute that provides for 52 weeks unpaid parental leave, or less, after 12 months service with the employer. However, many pre-reform federal awards and NAPSAs contain ‘family provisions’, which provide a total of up to 104 weeks unpaid parental leave. Where one of these instruments contains family provisions, this would override the parental leave provisions of the Standard because the quantum of leave is greater than 52 weeks.

Superannuation (OTE)

From 1 July 2008, the ordinary time earnings (OTE) definition under the superannuation guarantee (SG) legislation would override the definition of OTE in an industrial instrument for the purposes of calculating the 9 per cent employer contribution for superannuation. However, where the definition in the industrial instrument includes payments in addition to the OTE under the SG, such payments would need to be included in the SG calculation to comply with the applicable industrial instrument.

Notice of termination

In the case of termination by the employer, the minimum periods of notice of termination of employment (or payment in lieu of notice) prescribed by the Workplace Relations Act override any similar provisions in an industrial instrument or contract of employment. However, the period of notice of termination required to be given by an employee to the employer is determined by the notice provisions in the applicable industrial instrument or individual contract of employment. Any minimum period of notice required to be given by the employer that is greater than the provisions of the Workplace Relations Act would be enforceable.

Public holidays

The Workplace Relations Act provides for a paid day off (basic periodic rate of pay) for an employee when any of the prescribed public holidays fall on a day the employee has ‘guaranteed hours’. However, most industrial instruments (and state and territory public holiday statutes) provide for a greater number of public holidays than prescribed by the Workplace Relations Act. Therefore, the provisions of both the Workplace Relations Act and the applicable industrial instrument or state or territory statute need to be taken into account when determining an employee’s entitlement to a day off with pay. Also, any penalty rates for performing work on a designated public holiday are determined by the relevant industrial instrument, as the Workplace Relations Act is silent on this condition.

WorkChoices Standard vs Workplace agreements

An agreement made since the introduction of WorkChoices (AWA, ITEA or collective agreement) is subject to the Standard and any term that is less favourable than the Standard or the minimum entitlements prescribed by the Workplace Relations Act is unenforceable.

A term of a workplace agreement cannot modify or exclude an employment provision prescribed by the Standard unless it is more favourable to the employee. However, some workplace agreements may express entitlements in a manner that makes it difficult to discern whether the provision is more favourable than the Standard.

Assessing ‘more favourable’

The Regulations to the Workplace Relations Act use the following examples to clarify this point as to the ‘more favourable’ condition:

  1. If a workplace agreement provides for three weeks paid annual leave and eight weeks unpaid annual leave, this would be less favourable than the Standard with respect to annual leave because the Standard provides for four weeks paid annual leave each year. Under this provision, an employee would be entitled to four weeks paid annual leave and eight weeks unpaid annual leave.

  2. A provision permitting an employee to take eight weeks annual leave at half pay (where the available entitlement is four weeks of paid annual leave) would be regarded as more favourable than the Standard. Similarly, a provision that allows an employee to take up to 20 days personal or carer’s leave at half pay would also be considered more favourable than the Standard.

  3. A provision that provides no cap on the amount of personal leave that may be taken as carer’s leave taken by an employee in a twelve-month period would be more favourable than the Standard.

  4. The Standard does not provide a more favourable outcome in respect of paid personal or carer’s leave if a workplace agreement or written contract of employment permits accumulated paid personal or carer’s leave to be paid out on termination of employment.

  5. A provision that enables an employee to be credited with annual leave every fortnight instead of every month (as per the Standard) is more favourable than the Standard, whereas, crediting annually would be less favourable than the Standard. Crediting of leave in arrears of service would be less favourable than the Standard, but crediting in advance of service would be more favourable than the Standard.

Related

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No disadvantage test - Workplace Authority policy guide

 
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