February 2006

Work Choices: changes to State and Federal awards and agreements

The federal government's Workplace Relations Amendment (Work Choices) Act 2005 creates a new workplace relations system for all corporations. But what happens to all those existing state awards, state agreements, federal awards, certified agreements and AWAs?

Work Choices maintains an employee's terms and conditions of employment in existing awards and agreements (subject to some modifications) by preserving or freezing the award or agreement for a transitional period of either three or five years. During that period,Work Choices encourages the making of a federal workplace agreement.

Work Choices commences on a date to be proclaimed, probably in March 2006. That date will be called the reform commencement. In this bulletin we review what happens to all those existing industrial agreements. We highlight the important terminology, and some of the clumsy acronyms, that we will have to learn.

State awards

Work Choices says that state awards become a notional agreement preserving state award, or "NAPSA", on the reform commencement. That NAPSA operates for three years from reform commencement or until a workplace agreement commences.

A NAPSA can only contain terms that pertain to the employment relationship and all "prohibited content" is void. Prohibited content is yet to be defined by the regulations but will include bargaining fees, union training, union picnic days and the like.

From the reform date the NAPSA can only be enforced in federal courts. State industrial commissions are removed of any jurisdiction to enforce or vary the award so far as it applies to a corporate employer.

A state award only becomes a NAPSA for an employer if no term or condition of employment is regulated by a state agreement, such as an enterprise agreement. If there is an applicable state agreement (as opposed to an award) at the reform date, then the terms of the state award instead become part of what is called a preserved state collective agreement, or "PSCA" (see more below).

State agreements

State agreements, such as EBAs and individual state registered workplace agreements (such as WAWAs), become preserved state collective agreements ("PSCA") or preserved state individual agreements ("PSIA") on reform commencement. A PSCA or PSIA maintains its nominal expiry date and ceases to operate once replaced by a workplace agreement.

The PSCA or PSIA must not contain prohibited content, may only be enforced in federal courts, and, as with NAPSAs, the state commission has no jurisdiction to enforce or vary the agreement. A PSCA or PSIA can only be varied to remove ambiguity, discrimination or prohibited content.

Work Choices prohibits all industrial action before the nominal expiry date of the PSCA or PSIA with penalties of up to $33,000.

Federal awards

Existing federal awards continue in operation after reform commencement as a transitional award, or TA, and operate for five years.

Through award simplification and award rationalisation the transitional awards will be modified and simplified. Any not allowable transitional award matters, such as a trade union leave clause and restrictions on the engagement of contract labour, cease to have effect. All federal awards will be stripped back to thirteen allowable matters, though some preserved award conditions will remain.

Not all employers previously bound by a federal award will be bound by a TA. If an employer was bound by a state agreement before the reform date then the employer is not bound by the transitional award. This provision illustrates the government's preference for workplace agreements over industrial awards.

Federal certified agreements

Any existing federal certified agreement continues to operate under the new system as pre-reform certified agreement or PRCA, until terminated or another workplace agreement is made. Coercing a person to agree to terminate a PRCA is prohibited.

Australian Workplace Agreements, or AWAs

Existing AWAs continue to operate under the new system as a pre-reform AWA, PRAWA, and cease operation when terminated or another AWA is made. The "no disadvantage test" does not apply to new AWAs, which only need to satisfy the Australian Fair Pay and Conditions Standards.

Conclusion

Work Choices requires a change in mindset; conciliation and arbitration of industrial disputes is out, negotiated agreements are in. An employer needs to ascertain the status of all current industrial instruments applying to its workforce. Only by undertaking that task can an employer be confident of knowing the applicable terms and conditions of employment of its employees until a workplace agreement is made.

We are happy to assist employers identify NAPSAs, PSCAs, PSIAs, TAs, PRCAs or PRAWAs, and what terms are retained and which are prohibited. Employers can then assess the benefits of making a workplace agreement and completing the transition to the new federal system.