Did you hear about this recent case?

A Western Australian employer was left $60,000 out of pocket after two of his employees made an underpayment claim against him.

Did the employer mean to underpay his employees? Not at all…

In fact, he believed he was paying them in accordance with the AWA they were employed under, but as it turned out, he wasn’t!

He failed to get legal advice when he was drawing up the AWA, and a tiny drafting error resulted in the Federal Magistrates Court finding him guilty.

But you don’t have to risk this happening to you…

Click here to find out how to be sure your workplace contracts and agreements are 100% legal.

Until next time…

Claire

P.S Don’t forget about the great training session on the Fair Work Act I told you about last week…

It’s being run by some of Australia’s top industrial relations experts, and the material it covers is practical and actionable, so you are guaranteed to come away with information you can start putting into practice in your workplace straight away!

To find out more about how this cutting edge seminar can benefit you and your business, click here.

And at first, this new agreement-making process doesn’t seem to have much going for it.

For starters, you have to inform your employees immediately of their right to be represented by a union during the agreement making process. This seemingly leaves you with no way to make a non-union agreement, and certainly no way to make individual agreements like AWAs.

But despite this, there are some upsides to the new agreement-making process.

Here are 3 good reasons why you should consider making an enterprise agreement…

1. The agreement will replace awards (not just override them) – and it’s designed by you, not the Industrial Relations Commission!

The commencement of modern awards on 1 January 2010 will impose new and difficult employment conditions on many employers – and these conditions may not be suited for your business. Making an enterprise agreement is a good way to address this problem, because it will replace the relevant modern award.

2. It could be a long term investment for labour cost savings.

Making an enterprise agreement will give you the opportunity to ‘load up’ base rates of pay to such a level that you won’t have to worry about paying award entitlements to loadings, penalties, overtime and allowances separately.

While in the short-term this may lead to wage increases, that extra margin will absorb award base rate increases over time (and with no wage increase this year and the economy improving, we can expect a significant increase to minimum wages in 2010).

By making an enterprise agreement and ‘loading up’ base rates of pay now, 2 or 3 years into the life of the agreement you could only be paying the minimum wage – with no obligation to pay other award obligations.

3. It may be best to get in first!

If you don’t make an enterprise agreement now, you may be forced into making one on your employees’ (or their union representative’s) terms down the track.

Remember, if you have sections of your workforce that are union members, they have a right under the Fair Work Act to require you to negotiate in good faith with their union about making a collective agreement. It could be a good idea for you to get in first!

So there’s some food for thought…

Stay tuned for next week’s article – I’ll be showing you the other side of the argument by giving you three reasons not to make an enterprise agreement!

Regards,

Charles Power

P.S Subscribers: Don’t forget! Your most recent update contains a comprehensive chapter on the ins and outs of enterprise agreements.

• New Transfer of Business Laws Will Commence on July 1!
• Quick Tip of the Week: Changes to migration laws
• Workplace Helpdesk Q and A: Entitlements for award employees
• Workplace Wackies: Keyless Entry

Dear Reader,

As you are no doubt already aware, 1 July 2009 marks the commencement of the Fair Work Act. One area of workplace law that will be affected significantly by the new Act is transfer of business (formerly transmission of business under the Workplace Relations Act).

What is a transfer of business?

Transfer of business provisions may apply when an employer (the new employer) takes over part or all of the business of another employer (the old employer). The transfer of business provisions may mean that the new employer becomes bound by the old employer’s workplace agreements.

Remember though, transfer of business is only an issue where there is a change in employer. There will not be a change in employer if you acquire a business simply by buying the shares in the company that is the old employer.

What changes to transfer of business laws do you need to be aware of?

If you are taking over a business and becoming a new employer on or after 1 July 2009, you will need to be aware of the following changes to the current law:

1. The transfer of business provisions will operate in a broader range of circumstances. The test for when they operate will no longer focus on whether the new employer has taken over the business of the old employer. Instead, the test will focus on whether employees transferring from the old employer to the new employer will do the same or substantially similar work. The test will also focus on whether there is a particular ‘connection’ between the two employers. A ‘connection’ between employers will arise if the old employer and the new employer are members of the same corporate group, or if the old employer has outsourced (or “insourced”) the transferring work to the new employer.
2. Unlike the current provisions, the transferring workplace agreement will not cease to operate after 12 months.
3. The transferring agreement will obviously bind employees transferring from the old employer to the new employer. However, unlike current laws, transferring agreements may also bind new employees recruited by the new employer who perform transferring work (if no award or enterprise agreement covers those employees).

More information on these and other changes to transfer of business laws will be covered in future Employment Law Practical Handbook updates.

Quick Tip of the Week:Recent changes to migration laws mean that Australian employers seeking to sponsor skilled overseas workers will be now be required to prove how (in their case) recruiting employees from overseas will benefit Australia more than employing domestic workers.

For more information on these and other changes to Migration laws, watch out for the updated Migration chapter in your next update, due to arrive in your mailboxes next week!

Workplace Helpdesk: Entitlements for award employees

Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: We employ staff that earn less than $100,000.00/ year (but more than the award dictates) on common law contracts. Their contracts also allow for much more favorable conditions than the award. Are they still entitled to things such as leave loading on their annual leave?

A: Yes. The fact that you pay above award rates does not prevent an award covering employees. On and after 1 July 2009 there will be an option to cause awards not to apply to high earning employees (i.e. $100k plus), but you will need to fulfill certain requirements for this to happen.

For further information, please see this past edition of the Workplace Bulletin here:

http://www.workplacehandbook.com.au/20090603/modern-awards-and-employees.html

Workplace Wackies: Keyless Entry

A man who worked for the state in Hawaii was sent to jail on his fourth criminal conviction, but he didn’t lose his job. While serving time on weekends, he continued to work five days a week at his regular job as a prison guard. Isn’t there a saying about a fox watching the henhouse?

[Source: Idiots at Work]

Until next time…

Claire Berry
Editor

• Modern awards – the new face of the Fair Work Act
• Quick Tip of the Week: 85 ready-to-use, 100% legal, workplace contracts, policies and forms you can download right now!
• Workplace Helpdesk Q and A: What happens if an AWA or ITEA does not provide for redundancy entitlements?

Dear Reader,

As you probably already know, modern awards are an essential part of the Federal Government’s new industrial relations regime. The Australian Industrial Relations Commission (AIRC) is currently undertaking an ‘award modernisation’ process that is designed to reduce and simplify the 500 or more awards that currently regulate employment in Australia. These new, modern awards will take effect from 1 January 2010.

What do you need to do to prepare for modern awards?

You need to identify which of your employees will become covered by modern awards on 1 January 2010, and determine what is likely to be contained in those awards.

You can find the current drafts of the modern awards in the Award Modernisation section of the AIRC website – www.airc.gov.au. But remember, they will not operate before January 1 2010.

How can you make modern awards work for your business needs?

There are a number of ways that you will be able to tailor modern awards to suit the individual needs of your employees and your business.

These options include:

1. Award flexibility agreements

Each modern award will contain an award flexibility clause. This clause is designed to permit employers to reach an agreement with individual employees about varying the terms of the modern award to meet their individual needs.

For example, after 1 January 2010 an award flexibility clause will allow you to make an agreement to enable a receptionist to work a 40 hour week without the need to pay overtime by agreeing that the overtime is compensated for by the difference between the employee’s actual rate of pay and the award rate of pay.

Remember though, that there will be certain rules about how award flexibility agreements can be made and how they will operate! Your next Employment Law Practical Handbook update contains an updated version of the Awards chapter, and will answer all your questions about award flexibility agreements. If you are not already a subscriber to the Employment Law Practical Handbook, please click here for more details.

2. Contracting out of a modern award

You will also have the option of including “contracting out” provisions in modern awards. A contracting out provision will allow you to agree to prevent a modern award from applying to high income employees.

You should determine which of your high-earning employees are likely to be covered by modern awards (e.g. professional salespersons or IT workers). (High-income employees are those employees who earn $100,000 or more per annum for full time employees, indexed from 27 August 2007 and then annually from 1 July).

After 1 July 2009, you will be able to enter into a “guarantee of annual earnings” with these employees. This means that a modern award will not apply to the employees if their annual earnings exceed the $100, 000 threshold described above.

Again, there are certain rules about giving this guarantee and the way it operates. For more information about contracting out provisions and guarantees of annual earnings, please refer to the updated Awards chapter in your upcoming Employment Law Practical Handbook update, due to arrive in your mail box from next week!

Quick Tip of the Week:Every workplace needs documents that meet all the legal requirements. And, as you no doubt already know, ensuring that your policies, contracts and forms are completely compliant can be a very time consuming (not to mention expensive!) process.

Well not anymore! With the IR Toolkits – a collection of 85 legally approved forms, contracts, agreements, templates and policies – you can be 100% confident that your workplace documents are legally approved! And they are all in Microsoft Word format, so you can edit them with ease and start using them in your workplace immediately. And all this for a fraction of the cost of hiring a lawyer…

Workplace Helpdesk: What happens if an AWA or ITEA does not provide for redundancy entitlements?
Answered by Charles Power, editor-in-chief, Employment Law Practical Handbook.

Q: If an employee is covered by an AWA or ITEA that does not provide for redundancy entitlements, do they have the right to redundancy payments?

A: No. If an employee is covered by an AWA or ITEA that does not provide for redundancy entitlements, then they will not be eligible for redundancy payments during the period that the ITEA or AWA is in operation unlessthe entitlement arises under their employment contract.

Until next time…

Claire Berry
Editor

• How to deal with serious misconduct in your workplace
• Workplace Helpdesk Q and A: Confidential Information

Dear Reader,

Serious misconduct is misconduct serious enough to entitle you to end employment immediately.  It usually occurs when an employee breaches his or her duties and obligations of employment so seriously that it causes imminent and serious risk to the health or safety of a person or to the reputation or viability of your operations.

Examples of serious misconduct are:

• Theft
• Fraud
• Assault
• Being intoxicated under the influence of illicit drugs or alcohol at work (to such an extent that the employee cannot carry out their regular duties)
• Disobedience

How should you deal with serious misconduct?

Before you make any decision to dismiss an employee for serious misconduct, you must give the employee an opportunity to respond to the allegation.

Remember, dismissal for serious misconduct is likely to significantly damage an employee’s future job prospects.  For that reason, you should not take this step without carefully considering both the evidence of the misconduct and the employee’s prior work history.

Do you have to give the employee any notice of their termination?

Once you are satisfied that an employee has engaged in serious misconduct, you may terminate their employment without giving a warning, notice or pay in lieu of notice.  However, you must act immediately – if you sit on your hands after concluding that the employee has committed serious misconduct, you may lose your right to dismiss summarily.

Remember: You must still pay the employee for any unused annual or long service leave and remunerate them for any unpaid hours.

Workplace Helpdesk: Confidential Information

Q: A former employee of mine has recently begun employment with a competitor of my business. Through a mutual friend, I have been informed that my former employee has been sharing some of my marketing strategies with his new employer. What should I do?

A: You should immediately seek legal advice. In your case, it is important to act quickly, so you can minimise the potential damage to your business that your former employee may have caused.

However, you will need to investigate this matter thoroughly in order to determine whether or not your employee actually did misuse the confidential information of your business. If it transpires that the misuse did occur, then you should retain all available evidence of your former employee’s actions, and, if you believe the damage to your business is severe enough, you can apply to the court to obtain an order restraining his conduct.  This will prevent his new employer (your competitor) from utilising your strategies to further his business.

Have you got a short employment law question? Can’t find the answer in your handbook?

Just e-mail your query to helpdesk@workplacehandbook.com.au

Until next time…

Claire Berry

Editor

• How your business will be affected by new changes to the sub-class 457 visa
• Workplace Helpdesk Q and A: What is an ITEA and how does it work?

Dear Reader,

If you currently employ, or plan to employ, overseas workers on a sub-class 457 visa, then recent changes to legislation will soon apply to you.

What is a sub-class 457 visa?

A sub-class 457 visa is a temporary visa which can be used to temporarily employ overseas workers to fill nominated skilled positions in your workplace. The visa can be valid anywhere from 3 months to 4 years.

What are the new changes to the 457 visa?

On 23 May 2008, the government announced that minimum salary levels (MSL) for workers on sub-class 457 visas will increase by 3.8% from 1 August this year.

This increase will apply to any new 457 employees who join your workplace as well as those you already employ under the visa.

What will happen if you don’t comply with these changes?

In the past, employers only lost their sponsorship rights if they breached their 457 visa obligations. However, if you fail to comply with the new MSL, you could be held liable under a range of sanctions that the government will introduce into Parliament by the end of 2008. These new sanctions will aim to prevent the exploitation of 457 workers by imposing penalties on employers who do not abide by their 457 visa requirements.

For more information about sub-class 457 visas and your obligations as a sponsor, please refer to your Employment Law Practical Handbook.

Workplace Helpdesk: What is an ITEA and how does it work?

Q: What is an ITEA and how does it work?

A: An ITEA (Individual Transitional Employment Agreement) is a written employment agreement made between you and an individual employee that sets out the terms and conditions of their employment. In order to make an ITEA operational you need lodge it with the Workplace Authority and ensure that the ITEA meets certain statutory requirements. During the period that an ITEA operates, it replaces any awards or other statutory workplace agreements regulating the employment of that employee.

Unlike other awards or agreements, you can only enter into an ITEA during the transition to the new workplace relations system, which will be fully implemented by 1 January 2010. Because of this, the making of new ITEAs is likely to be barred after 31 December 2009.

An ITEA can only be made if:

• You had at least one employee subject to an AWA as at 1 December 2007 and
• It is made with either a new employee or an existing employee who is subject to an AWA or other industrial statutory instrument

Have you got a short employment law question? Can’t find the answer in your handbook?

Just e-mail your query to helpdesk@workplacehandbook.com.au

Until next time…

Claire Berry

Editor

• 6 reasons why you must keep your letters of appointment current
• Workplace helpdesk – What you can legally ask about medical certificates

Dear Reader

It is good practice to issue a written contract or letter of appointment to a new employee when they are first employed. However, as time goes by this letter may no longer reflect the conditions of employment because the employee has moved into different roles in your organisation. As an employer, you should ensure that you update documentation every time your employee’s employment conditions change.

One way to protect your organisation is to ensure the original contract or appointment letter provides that its terms still apply despite subsequent changes to employee duties, pay or job title. However if the role change is significant you should review whether terms ought to be added or changed, such as provisions protecting confidential information or restraining competitive behaviour after the employee leaves.

There are six reasons why you must keep your letters of appointment current!

1. To ensure there is a clearly specified notice period for termination of employment (otherwise the contract imports an obligation to give reasonable notice).
2. To ensure any changes to staff benefits are recorded.
3. To ensure a relevant enforceable provision preventing the employee from exploiting for their personal gain,(or that of any competitor) your confidential information or the connection they acquire over your customers, staff and suppliers.
4. To reflect any changes in employment law.
5. When a new owner takes over the business, to ensure the correct employer is named.
6. When a fixed term-contract expires, to replace it with either an ongoing contract or another fixed-term contract as appropriate.

What you should include in letters of appointment

The letter of appointment should contain:

• Appointment date
• Position
• Remuneration
• Brief mention of benefits offered, medical, superannuation, leave
• Any allowances or tools of trade issued
• Probation clause
• Termination clause
• Reference to annexures, policies and procedures.

Separate annexures that can be included:

• Confidentiality agreement or restraint
• Job description
• Policies and procedures
• Clauses protecting the employer, e.g. intellectual property, indemnities, sick leave regulations, etc.
• Remuneration structure and deductions (salary calculations)
• Commission structures or incentives offered.

What you can ask about medical certificates?

Question

I suspect that my employee is presenting me with dodgy medical certificates. Can I ask her doctor to verify the legitimacy of the certificates?

Answered by Holding Redlich:

You are free to ask the doctor whether they are a registered health practitioner. However, the doctor is entitled to refuse to supply information about his/her patient without the patient’s consent. If you have good evidence to suggest the doctor is issuing dodgy certificates, you can request the employee to give you permission to ask the doctor:

• If she consulted with the employee;
• If, in her opinion, the employee was unable to work on the days she was

Booked off due to sickness or injury as the case may be.

If the employee withholds consent you could, depending on the strength of your evidence, discipline the employee for improper use of such leave entitlements.

Yours Sincerely,

Suzanne Barry

Business Publisher

PS: Remember if you are fully paid up subscribers you can access our premium service, the Employment Law Helpdesk. You can email our specialist legal team at helpdesk@workplacehandbook.com.au your simple employment law queries. If you have an outstanding invoice contact our customer service team today on 1300 782 911 so you can take advantage of this valuable service.

The federal government’s transition bill, which bans the creation of new Australian Workplace Agreements (AWAs), initiates changes to the award system and allows certain employers to make a different form of statutory agreement with individual employees (ITEAs) before 2010, became law on 27 March 2008. Here’s what you need to know.

Amendments

The Senate committee that held an inquiry into the bill recommended that it be passed without any changes.

However, the government has decided to make 37 amendments to the bill. These changes are based on submissions made to the inquiry.

The most significant of these changes is that employers have now been given the right to make ITEAs with former employees, a right that was excluded in the draft legislation. This allows ITEAs to be made with casuals and labour hire workers.

However, employers will not be able to make an ITEA with an ex-employee if the employee was terminated in order to move them onto an individual agreement (Workplace Express, March 18).

The amendments will also see greater protections introduced for outworkers.

Backlog worsens

Workplace Relations Minister Julia Gillard says it would take eight and a half months to process the backlog of Australian Workplace Agreements (AWAs) still awaiting assessment.

There are more than 138,000 awaiting finalisation.

“That is eight and a half months where employers and working Australians would have no idea whether or not that the agreement they were working under was lawful,” Ms Gillard said.

Ms Gillard said such a wait could result in bankruptcy for a small business (WA Business News, March 17).

Phasing out AWAs

Some organisations are choosing to opt out of AWAs. The University of Ballarat, for example, has struck a deal with the National Tertiary Education Union which will see employees on AWAs given the choice to opt out of them in April, allowing them to return to collective agreements. This agreement has been approved by the Federal Court.
The union’s lawyer, Kamal Faroque, says the settlement sets a precedent for how to phase out AWAs (ABC Ballarat, 18 March).

Until next time,

Chloe Wilson,
Editor
Workplace Bulletin

But what are these changes likely to be? And what do you need to do to avoid penalties, backpay and bad publicity?

First things first

The new federal Labor government’s policy is to introduce new legislation in two stages. The first of these will be a transition bill (explained below), followed by more comprehensive legislation to be introduced in the second half of 2008.

But before any of this occurs, new Industrial Relations minister Julia Gillard is set to meet with business groups and unions to discuss the transition bill on December 18, when she will have her first meeting with the National Workplace Relations Consultative Council.

Following this, meetings with state and territory education and IR ministers will be held in January, when the Business Advisory Group will also be appointed (The Age, December 10).

When will AWAs go AWOL?

The central focus of the first stage of IR changes will be the abolition of Australian Workplace Agreements (AWAs). Legislation that scraps AWAs will be introduced in parliament during February 2008.

At the moment, nothing prevents you from making an AWA, or from offering employment on the basis that the employee would enter into an AWA. For instance, you could make an AWA today with an employee under existing rules that could run to 31 December 2012!

Many employers have rushed to submit AWAs for approval, or applying to extend current AWAs. This has led to a serious backlog of workplace agreements awaiting approval; there are currently close to 150,000 agreements hanging in the balance. The Workplace Authority received a spike of applications for AWA approval in November; a total of 39,073 new agreements were lodged during the month, almost all of them AWAs.

Be aware that if you are found to have coerced an employee into signing an AWA, you could be facing penalties. Director of the Workplace Ombudsman, Nicholas Wilson, has warned that severe penalties will apply for employers who pressure existing workers into signing an AWA (News.com.au, December 01).

Telstra is currently being investigated by the Workplace Ombudsman over claims that it has forced employees to sign AWAs (ABC news, December 06).

ITEAs – A new idea

When the legislation takes effect in early 2008 it will ban AWAs from a certain date.

No AWAs made prior to that date will be retrospectively altered and they will continue to operate under the current rules, with once exception – if terminated and not replaced by an ITEA (explained below) the employee will revert to the collective agreement or award applying at the workplace.

When the new legislation takes effect it will allow an employer that was party to at least one AWA as at 1 December 2007 to make individual statutory agreements known as ‘Individual Transitional Employment Agreements’ or ITEAs. If you were not party to an AWA as at 1 December 2007 your only option for making a statutory agreement after the legislation becomes effective will be to make collective agreements.

ITEAs will be like AWAs in that:

• ITEAs are made with individual employees
• Minimum wages paid under ITEAs must reflect any adjustments to minimum wages by the Fair Pay Commission
• Awards and collective agreements will not be able to override an ITEA while it remains in operation

However, ITEAS will be different to AWAs in important areas, namely:

• The nominal expiry date of an ITEA cannot be later than 31 December 2009
• A stricter test than the Fairness Test will apply. If a collective agreement applies to the work performed by the employee, the ITEA cannot disadvantage the employee against the terms of that collective agreement. If no collective agreement applies, the ITEA cannot disadvantage the employee against any applicable award and the Fair Pay and Conditions Standard.

Go collective!

The legislation being introduced in early 2008 is also likely to deal with collective agreements. Labor has promised to retain most of the existing avenues to make agreements covering some or all of your employees as a group. These can be made with or without a union. The current rules restricting what can go into these agreements will be lifted. Like ITEAs, a stricter test than the Fairness Test will apply to ensure that the agreement cannot disadvantage the employee against any applicable award and the Fair Pay and Conditions Standard. The maximum term for these agreements is reduced from 5 to 4. Unlike the situation under the current legislation, applicable awards will continue to underpin the agreement during its period of operation.

Ten protected conditions

The new federal government has promised many other changes to IR laws, but says that they will take place over time; the second round of changes is due to be drafted in the first half of 2008.

At the core of Labor’s policy are ten minimum standards that all employees will be entitled to:

1. Maximum hours of work
2. Parental leave
3. Flexible work for parents
4. Annual leave
5. Personal, Carers and Compassionate leave
6. Community Service Leave
7. Public holidays
8. Information in the workplace
9. Termination of Employment & Redundancy
10. Long Service Leave.

These will not apply until 2010, although they may form part of the stricter test that will apply to ITEAs or collective agreements.

Other than these ten conditions, one of the most significant changes to be aware of is that the Australian Industrial Relations Commission (AIRC) will be replaced with a new ‘independent umpire’ known as Fair Work Australia in 2010.

Over the next 2 years the new government will also create a different unfair dismissal system and modify 4,300 awards in an attempt to simplify and modernise them. It will also try and convince the State governments outside Victoria to close down their IR systems and to allow a single national IR system for all Australian employers. Early signs indicate that this is likely to happen.

Definition: Award

An award is a legal document that sets out the minimum conditions for a given industry or workplace.

What should employers do now?

Currently, none of Labor’s promised changes have become law. The first round of proposals will not come into effect until federal parliament sits again and passes the legislation, which will occur in February.

This means that you are not under any obligation to make immediate changes in response to the change in government. However, 2008 looks set to be a big year for changes in IR laws, with two significant sets of changes almost certain to come into force.

It has never been more important for employers to stay up-to-date with employment law. The regular updates you will receive as part of your subscription to the Employment Law Practical Handbook will help you to ensure your workplace is always compliant with any changes that occur.

In the next edition – Take it or Leave it?

Annual leave entitlements can cause headaches for employers at this time of year. As employees take summer holidays, employers must ensure that they’re keeping accurate records and making correct payments. They may also have to deal with temporary staff.

The next issue of the Workplace Bulletin will explain how to deal with annual leave, including employee entitlements, cashing out leave and employer rights.

Until then, all the staff at Port Phillip Publishing wish you and your workplace a happy and safe Christmas break.

Yours Sincerely,

Chloe Wilson
Editor
The Workplace Bulletin

Many employers run into trouble when their workplace agreements fail to meet the standards of the WorkChoices Authority, set out by the Fairness Test.

Want to know how to cut through the Australian Workplace Agreements (AWAs) red tape? Read on and follow the easy tips, helpful checklists and examples to make sure you get the most out of your employment arrangements.

AWAs in the Spotlight

National retailer Spotlight faced intense media scrutiny and public censure after 460 of its workplace agreements failed the government’s new Fairness Test. Spotlight’s agreements legally removed penalty rates, but only gave employees an extra 2 cents per hour in return. Spotlight’s experience has demonstrated that many employers still don’t understand the requirements of the Fairness Test. Failing the Fairness Test could expose your business to significant back payments, as all employees must be paid compensation for any period the employer fails to comply…not to mention the untold costs of all that bad publicity!

Introducing AWAs and the Fairness Test

AWAs, are individual contracts negotiated between employers and employees. They represent a significant shift away from union bargaining and other types of collective bargaining, and cut back many of the award conditions won by the unions over the years in sectors such as retail and hospitality.

When AWAs were initially introduced, many employers rapidly moved to remove terms such as penalty rates from contracts. In response to public concern about this trend, the government introduced the Fairness Test.

Pass the Fairness Test with flying colours…

The Fairness Test applies to employees who would otherwise be entitled to the benefit of protected award conditions and are paid less than $75,000 per year. The Fairness Test ensures that all workplace agreements meet two key criteria: that minimum conditions are protected and that nothing prohibited is in the agreement.

Understanding Minimum and Protected Award Conditions

Minimum standards and protected award conditions provide a safety net for employees. They guarantee workers minimum wages and conditions. Any conditions included in an AWA that are less favourable than the Australian Fair Pay and Conditions Standard will immediately be treated as void.

What are the four guaranteed minimum conditions that must be present in any AWA?

Checklist:

Beware a bargain when workplace bargaining with employees

Protected Award Conditions (also known as ‘protected allowable award matters’) are automatically implied into ALL workplace agreements unless explicitly excluded or modified. These conditions include rest breaks, incentive-based payments and bonuses, annual leave loadings, public holidays, some financial allowances, overtime and shift work loadings, penalty rates and outworker conditions.

When bargaining with an employee over protected award conditions, you need to be aware that if an employee agrees to give up or trade any parts of their protected award conditions, such as shift loadings or weekend penalty rates, you must provide compensation that is considered fair by the WorkPlace Authority. Unfortunately for employers, there is no simple definition for what is considered fair. A suggested guideline is to estimate what the financial value of the protected award condition being traded is, in comparison with the financial value of the new term..You don’t necessarily have to pay the exact difference if the new term is of equal value to the employee – for example allowing them to leave work early to pick up their children from school.

Since the legislation provides no definition of ‘fairness’, there is an element of uncertainty in the application of the Fairness Test by the WorkPlace Authority. It is therefore crucial to provide all the information requested by the WorkPlace Authority when submitting an AWA. The authority has reported that more than 56,601 of the agreements submitted since May 2007 cannot be approved until the employers provide more information.

There is no way to appeal the decision once an AWA is deemed to fail the Fairness Test, even if the WorkPlace Authority has misinterpreted a clause in your agreement. Therefore, it is essential that your agreement is carefully drafted to make it clear that the employee IS being fairly compensated in exchange for giving up any protected award conditions.

If you have followed the checklists and examples above, you are already well on the way to successfully drafting an AWA that meets the WorkPlace Authority standards.

Keep an eye out for your next fortnightly e-mail update to learn how to avoid a $33,000 penalty…

The second stage of the Fairness Test checks to ensure that no prohibited content has been included in AWAs submitted by employers. In our next newsletter, we will tell you how to avoid a $33,000 penalty for lodging an agreement that contains prohibited content. We will also follow the Spotlight story to see how Australian businesses are responding to WorkChoices, and explore the other agreement making options that might be available to you and your employees.

Yours Sincerely,

Laura MacIntyre
Editor
The Workplace Bulletin