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Workplace Agreements
Under WorkChoices there are 3 types of workplace agreements recognized under the Act:
- Australian Workplace Agreements (AWAs- formerly known as individual enterprises agreements),
- Employer Collective Agreements
- Union Collective Agreement (formerly known as Union Enterprise Bargained Agreements- Union EBAs).
The advantage of these workplace agreements over common law contracts of employment is that employers and employees can agree to terms that will displace the operation of an applicable award. For example an employer can agree to pay an employee a lower rate of pay but provide them with additional fringe benefits, an option which would not be available under an award. In other words it helps employers and employees get around the one-size fits all approach embodied in the award system.
What is an AWA or Australian Workplace Agreement (also known as an individual contract)?
An AWA is an individual contract made between a worker and an employer. It is individually negotiated. Under the Howard Government’s new industrial relations laws AWAs need to comply with the Australian Fair Pay and Conditions Standard.
See what is included in the Australian Fair Pay and Conditions Standard.
Any agreement that provides for terms that are less generous than the Australian Fair Pay and Conditions Standards will be void. Any terms in a workplace generous that are more generous than the Australian Fair Pay and Conditions Standards will be legally enforceable.
What is a Union/Employer-Employee Collective Agreement?
Collective Agreements are negotiated by an employer with a group of employees or a union representative on their behalf. This approach is popular with employers because it allows them to save time as they do not have to sit down with each individual employee and negotiate an agreement. It can also be useful for dealing with new employees who can be presented with a pre-approved agreement.
Employees like this approach because by binding together as a collective group they are able to have more bargaining power. From an employer’s perspective the downside of this option, is that it often opens the ways for union to enter the workplace which in various industries can be disruptive and confrontational.
In deciding whether to enter into an AWA or union/employer-employee collective agreement, business need to decide which option would be more efficient in the long term.
The most major reform introduced by WorkChoices in relation to Workplace Agreements is the abolition of the no-disadvantage test and the creation of a system based on approval by registration.
Registering a Workplace Agreement
Under the old system it was very difficult for a workplace agreement to be certified, as all workplace agreements had to pass a no-disadvantage test. It was not till that agreement was certified that an agreement became legal effective.
To be registered under the “no disadvantage test” a workplace agreement (collective or individual) had to contain rates and conditions that are equal to or better than those contained within an award, i.e. the rates and conditions set in an EBA or AWA must be the same as or better than those in the relevant award. As every agreement had to be subject to scrutiny it often meant that it took up to 6 months for any agreement to be registered under the old system. Notwithstanding that both an employer and employee had voluntarily agreed to workplace EBA and had even spent months negotiating the terms of their employment.
It was the costs and delay of this process that largely accounted for the failure of many businesses to adopt workplace agreements under the old system.
WorkChoices has moved to resolve this problem by abolishing the no-disadvantage test and replaced with a new set of safeguards.
The most important safeguard is that a workplace agreement cannot provide for employment conditions that are less generous than the Australian Fair Pay and Conditions Standard.
See what is included in the Australian Fair Pay and Conditions Standard.
Moreover, to prevent parties from exploiting this system procedural safeguards do exists to ensure that:
- Every employee or employer, if they so desire have a right to be represented by a bargaining agent of their choice in negotiating that agreement.
- That an employer provide employee with information sheets outlining what is a workplace agreement, informing them of their rights to be represented by a bargaining agent and information on how they will registering that agreements.
- Provisions also outline how an agreement is to be approved. For an AWA it needs to be signed by an employer and employee. Whilst for a collective agreement it needs to be signed by an employer and ratified either by a majority vote of the employees as a collective group or by a union delegate on their behalf.
Strict penalties apply for employers who register an unapproved workplace agreement or who do not comply with the correct procedures. That agreement may also be set aside by the court.
Moving employees from pre-reform Union EBAs to AWAs
A new procedure has been created for terminating workplace agreements. This has huge consequences for those seeking to move their employees from a pre-reform union EBA to individual AWAs.
If an employer wants to move their employees from a union collective agreement to an AWA they first need to terminate the workplace agreement.
Under the new system there are three ways to terminate a pre-existing workplace agreement, either by:
- Agreement between those who are parties to the workplace agreement.
- Unilateral termination which depends on whether the terminated workplace agreement does or does not include a termination clause. If a workplace agreement does include a termination clause, that agreement can only be terminated in accordance with that term. If a workplace agreement does not include a termination clause, it can only be unilaterally terminated after the agreement has passed its nominal expiry date and when the terminating party has given everyone who is subject to that agreement 90 days notice.
An employer who terminates a workplace agreement may then give their employees one of three options:
- to negotiate and sign an AWA.
- to be covered henceforth by the Australian Fair Pay and Conditions Standard.
- to make an application to the Australian Industrial Relations Commission to be covered by an award. However an employer can contest this application at the Australian Industrial Relations Commission.
Importantly an employer is not allowed to dismiss any employees for failing to negotiate a workplace agreement. Similarly, although it may get heated a union is not allowed to take or threaten to take industrial action to coerce an employer to continue with a union EBA or to prevent their members from signing AWAs.
Regardless of the above rules an employer is allowed to make it a condition of employment that any new employees enter into an AWA.
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