8 May 2007 Issue 53
EMPLOYMENT BRIEFLY
Federal Government announces its "Fairness Test"
Industrial relations has certainly been in the headlines in recent weeks.
Last week, the Australian Labor Party released its industrial relations platform in a document titled “Forward with Fairness: Labor’s plan for fairer and more productive Australian workplaces”. These are no more than policy proposals at this stage. As they are not as yet law, we will not provide extensive analysis.
On 4 May 2007, the Coalition Government launched its “Stronger Safety Net for Working Australians” which, in effect, reintroduces the (Pre-WorkChoices) No-Disadvantage Test as part of the agreement making process. These changes take effect from 7 May 2007 and will become law when legislative amendment is affected. They therefore warrant closer analysis and expectation.
When does the Fairness Test apply?
All workplace agreements, both individual and collective, lodged on or after 7 May 2007 will be subject to the Fairness Test.
The Fairness Test will not be applied retrospectively (i.e. to workplace agreements lodged before 7 May 2007).
Who applies the Fairness Test?
The Office of the Employment Advocate (now known as the Workplace Authority) will conduct the Fairness Test on all workplace agreements upon lodgement. There does not appear to be any avenue of review or appeal from a decision of the Workplace Authority when applying the Fairness Test. This could prove problematic.
What is the Fairness Test?
The Fairness Test requires the Workplace Authority to consider the monetary and non-monetary compensation offered in a workplace agreement where protected award conditions have been modified or removed, and compare the compensation with what the employee would otherwise have been entitled under a strict application of the applicable award conditions.
The protected award conditions are as follows:
- Penalty rates – including for work on public holidays and weekends;
- Shift and overtime loadings;
- Monetary allowances;
- Annual leave loadings;
- Public holidays;
- Rest breaks; and
- Incentive based payments and bonuses.
In applying the Fairness Test, the Workplace Authority will consider the employee’s specific employment obligations (i.e. shift work, weekend shifts) and other factors, such as:
- Industry factors
- Location of business
- Economic circumstances of the business
- Opportunities of the employee
- Relevant working arrangements
- Entitlements
Agreements that fail the Fairness Test
If a workplace agreement fails the Fairness Test it is not enforceable. The Workplace Authority will provide advice as to how to amend the workplace agreement for compliance with the Fairness Test. The parties will be given 14 days to vary the workplace agreement.
If the workplace agreement is not varied, it is void and the employee’s terms and conditions of employment will be derived from the most appropriate industrial instrument (i.e. the instrument that would otherwise apply) for example the award.
Pre-lodgement assessment
Either party to a workplace agreement may request a pre-lodgement assessment be conducted by the Workplace Authority. The Workplace Authority will provide a written advice following its assessment which, if positive, will see approval of the workplace agreement fast-tracked.
The Workplace Ombudsman
The Office of Workplace Services has been renamed the Workplace Ombudsman, and will be responsible for the following:
- Conducting regular random audits of employers;
- Investigating breaches of workplace law;
- Undertaking compliance audits; and
- Prosecuting employers in breach of legislation, awards or workplace agreements.
For further information about issues covered in this article, please contact Amanda Green on 8210 1200 or
E-mail agreen@normans.com.au.
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