Workplace Agreements are the hot topic in IR at the moment. The Howard government is promoting workplace agreements as a major breakthrough in workplace reform, whilst the federal opposition boldly proclaimed at one stage an intention to ensure they would be torn up under a Labor government.
Just what are workplace agreements, why are they so controversial, and should your business be considering their implementation?
Workplace Agreements Explained
Before WorkChoices, workplace agreements could only be negotiated between a specific employer and a specific employee, allowing the parties to override any Award which might otherwise apply, and also to override State laws and regulations.
As an example, under the Long Service Leave Act NSW 1955, it was unlawful for an employee to cash in their long service leave entitlements: that is, they had to take the leave in order to be paid for same. In some industries such as the hospitality industry, employees could enter into an AWA so as to override that State law to enable them to cash in their long service leave.
A difficulty with the old AWA system was that before an AWA became operative, it would need to be approved by the Office of the Employment Advocate (OEA).
In order for the OEA to approve it, the OEA would have to be satisfied that, when assessed overall, there was no disadvantage to the worker in entering into the AWA when compared with their entitlements otherwise under the existing Award. This complicated consideration meant that AWAs could take months to be approved, creating a delay which made the AWA system cumbersome. The No Disadvantage Test itself meant that little benefit could actually be achieved in entering into an AWA.
Previously, if a company or its employees wished to have in place an agreement which covered a group of workers, this had to be done by way of a certified agreement, approved by either the State or Federal Industrial Commissions. The process of obtaining the Commission's certification was time consuming and expensive, and often acted as a disincentive for employers to make such an arrangement.
Under the new system, workplace agreements are available not only with respect to individual employees, but to groups of employees in the one agreement, including ones where an employer makes an agreement with all persons employed in a single business (or part of a single business), and ones where the employer makes an agreement in writing with one or more unions, sometimes even before any staff have been hired, come under the same agreement.
Greater Benefits, Easier Process under WorkChoices
Why would a business elect to go with workplace agreements?
The most striking benefit to employers under the new system is that the No Disadvantage Test has been abolished. It is entirely acceptable for the agreement to be less generous than the applicable award. The only lower threshold imposed is that the agreement must not make provisions less generous than the Fair Pay and Conditions Standard. Those familiar with the Standard will know that as far as rates of pay are concerned,this is a very low threshold indeed.
It is not hard to see why workplace agreements are so controversial; they represent a major move away from the award system, and in so doing may significantly marginalise the union movement as workplace agreements become entrenched in the Australian industrial landscape.
Employee groups need not be entirely cynical about workplace agreements.Studies have revealed that for many employees, workplace agreements have led to improved wages and better conditions. This is because a workplace agreement, if properly drafted, will allow an employer to positively reward hard working employees, rather than being locked into a rigid award pay scale that has often taken greater notice of years of service rather than the quality of actual work performed.
Procedurally, the system is simple, efficient, and cost effective. A new workplace agreement commences when it is lodged with the Office of the Employment Advocate (OEA) rather than afterit has been approved by OEA. This means that rather than waiting several months for the OEA in the case of individuals, or several months before the Commission's approval in the case of group agreements, all such agreements now come into force immediately when they are sent to the OEA, which may be the same day that the parties have signed the agreement.
Compliance Issues: Be Careful
There are some important compliance obligations regarding the implementation of workplace agreements which employers should be aware of. Whilst these steps are not onerous, if they are not followed the entire agreement may be rendered void.
Some terms of awards are now defined as "protected award conditions". If a workplace agreement remains silent on any protected award conditions, those conditions will still apply to the parties after the workplace agreement commences.
We recommend to our clients that they call upon the assistance of an employment lawyer to help draft and implement such agreements to ensure full compliance, and to make the instrument as effective as possible.
An experienced lawyer will also be able to recommend strategies to assist in the process of selling workplace agreements to staff. This would include, for example, offering cashing-in benefits to employees, such as in relation to annual leave and sick leave, under the agreement.
If you have any queries or would like further information regarding Workplace Agreements please contact Kylee Dare on telephone (02) 49622688 or email kdare@lawlerpartners.com.au
