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Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000



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Bills Digest No. 21 2000-2001

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

Passage History.......................................................................................................................... 1

Purpose....................................................................................................................................... 1

Background ................................................................................................................................ 1

Main Provisions ......................................................................................................................... 6

Concluding Comments............................................................................................................... 7

Endnotes..................................................................................................................................... 8

Contact Officer........................................................................................................................... 9

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Passage History

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Date Introduced: 28 June 2000

House: House of Representatives

Portfolio: Employment, Workplace Relations and Small Business

Commencement: By Proclamation on or within 6 months of receiving Royal Assent, or the next day after the end of that period.

Purpose

The purpose of this Bill is to encourage the spread and use of Australian Workplace Agreements (AWAs) by reducing some procedures. AWAs were introduced under the Workplace Relations and Other Legislation Amendment Act (WROLA) in 1996. The aim of the Bill is to make the procedures concerning the scrutiny and filing of these agreements easier, and to clarify operation and termination procedures. The Bill also expands the role and responsibilities of the Employment Advocate (EA) who reviews AWAs and files them.

Background

Amendments to AWA procedures were contained in Schedule 9 of the Workplace Relations Legislation Amendment (More Jobs Better Pay) Bill 1999. This Bill passed the House of Representatives on 29 September and was introduced into the Senate on 14 October 1999.1 The Senate Employment, Workplace Relations Small Business and Education Legislation Committee reported on the Bill on 29 November 1999 (report). The Bill has not passed the Senate.

The Workplace Relations Amendment (Australian Workplace Agreement Procedures) Bill 2000 (AWA Procedures Bill 2000) re-introduces similar AWA procedures provisions to those contained in Schedule 9 of the ‘More Jobs, Better Pay’ Bill, and if passed by Parliament will amend the Workplace Relations Act 1996 (WR Act).

The amendments outlined AWA as detailed in its Explanatory Memorandum would:

2 Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

• provide for AWAs to take effect on the date of signing or, if later, the date specified in the AWA as the commencing day, or, in the case of a new employee, the date the employment commences

• permit employees to sign AWAs at any time after receiving a copy of the information statement prepared by the Employment Advocate and an explanation of the effect of the agreement

• permit an employee party to an AWA that provides for remuneration of $68,000 per year or less to withdraw consent within a cooling-off period

• remove the requirement relating to offering identical AWAs to comparable employees

• simplify the approval process by:

− consolidating the existing assessment of filing requirements and approval requirements into a one step approval process

− removing the requirement that the Employment Advocate (EA) refer AWAs to the Australian Industrial Relations Commission (AIRC) where there is concern that the AWA does not pass the No Disadvantage Test (NDT) - the EA would apply the no-disadvantage test in all cases (subject to principles which may be developed by the President of the Commission), and

− providing a more streamlined process for AWAs that provide rates of remuneration in excess of $68,000 per year.

• amend the provisions dealing with the relationship between AWAs and certified agreements and awards made under subsection 170MX(3) of the WR Act, and

• remove the limited immunity available in respect of industrial action taken in support of a claim for an AWA.

The scheme of AWA procedures as envisaged in 1996 was to be straightforward, as outlined by Mr Reith in his Second Reading speech at that time:

The government accepts that greater emphasis on flexibility and self-regulation under AWAs must be accompanied by appropriate employee protections and sanctions against those who abuse the flexibility we are providing.

AWAs will be formalised simply, by being filed with the Employment Advocate, EA. The EA will be an independent statutory officer whose powers and functions are laid down in the legislation. The Office of the Employment Advocate will be established as a distinct entity to facilitate the operation of AWAs and foster proper understanding and application of the opportunities, rights and obligations provided for by the new act.

Advice to employees on statutory entitlements and services of the EA will also be required by the legislation, and the EA will provide employers with readily accessible

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 3

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

information and pro forma material for this purpose … Procedures for filing AWAs will be straightforward. A simple declaration will be made by the employer that the statutory requirements for the AWA have been met—most notably, that the AWA provides terms and conditions which are no less favourable than the statutory minimum conditions.

The EA will not vet the agreement before it comes into effect, and all agreements will be confidential to the parties, as they should be … Complaints relating to non-observance of AWAs, including breaches of the minimum conditions, may be taken to the EA for investigation, and following investigation and conciliation, can be taken to a court. The use of duress to obtain an AWA will, where a complaint is upheld, lead to its invalidation, appropriate orders by the court, including rectification by the parties, and/or a penalty. The EA will be empowered to investigate complaints of duress in the making of AWAs. In the course of reaching AWAs, there will be a right to take protected action. However, there will be no such right during the period of operation of an AWA.2

To enable the WROLA 1996 Bill to pass the Senate certain amendments were accepted by the Government. Important amendments were outlined in the Agreement between the Commonwealth Government and the Australian Democrats (October 1996). Many of the current provisions concerning the operation of AWAs were put into legislation as a result of that agreement.

Some of the key current legislative provisions deriving from that agreement determining AWA procedures are:

• AWAs must meet the no disadvantage test when compared to the relevant award (rather than a set of minimum conditions)

• Consultation processes are specified, and the EA must approve and vet the agreement

• The EA can designate the ‘appropriate’ award where employees are not covered by an award to assess the AWA

• Existing employees must have been given a copy of the agreement for 14 days prior to signing it, and 5 days in the case of new employees

• Employee/s have genuinely consented to the agreement

• There would be no intervention by a third party although the EA could contact parties if there was a need

• Where an AWA appears less favourable than the award, the EA can suggest an amendment, or accept an undertaking that no-one will be worse off

• If an AWA does not meet the NDT test, the EA can refer it to the AIRC for resolution which allows an application of the public interest test.

• AWAs covering more than one employee will take effect from date of approval, and for new employees from date of lodgement, or a date specified

4 Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

• All employees doing comparable work must be offered the same AWA, to be stated in the employer’s application for approval

• AWAs must be lodged within 14 days of being signed

• Bargaining agents can be appointed and intimidation or coercion in an AWA negotiation is prohibited

• AWAs cannot displace an applicable certified agreement until the expiry of that agreement

The proposed changes to AWA procedures proposed by this Bill do not appear to be significantly different to the AWA amendments proposed by the Minister in 1999 as canvassed in his Second Reading Speech:

The current filing and approval processes for AWAs will be amalgamated to ensure a much simpler and more streamlined process. AWAs and variation agreements will be able to take effect from the day of signing or the date specified in the agreement or the day employment commences. This will mean that there is a presumption that the AWA meets all the statutory tests and that the parties in agreement require no further action. There are complementary provisions introducing cooling off periods and provisions to fully protect employee interests. AWAs for high salary earners (those whose remuneration is higher than $68,000) will be fast tracked, and identical AWAs will not be required to be offered to all comparable employees.

Approval of all AWAs will be by the Employment Advocate. Where agreements are made which raise concerns about the ‘no disadvantage’ test (NDT), the Employment Advocate will retain the right to request that parties modify their agreement if it does not meet the requirements of the NDT, or reject the agreement. The Employment Advocate will also be empowered to approve AWAs on public interest grounds (for example, to meet circumstances where short-term business survival is at issue) but must do so in accordance with principles which may be laid down by the AWRC.

In addition to simplifying agreement-making processes, the legislation will allow greater scope for use of AWAs, including their operating more effectively in combination with CAs. AWAs will prevail over CAs, either to the extent of any inconsistency or comprehensively (at present, this may only occur in limited circumstances). In addition, CAs will not be able to operate to exclude later AWAs, as is the case under current arrangements. Provision is also being made to ensure AWAs are not excluded by those awards (for the term of their duration) made under s170MX.3

In his Second Reading Speech introducing the Workplace Relations Amendment (Australian Workplace Agreement Procedures) Bill 2000, the Minister canvasses the removal of the access to limited immunity for industrial action in negotiating an AWA. (Division 8 Part VID). This was also proposed in the ‘More Jobs Better Pay’ Bill. The proposal to remove the Division is found under Item 9 of the AWA Procedures Bill 2000. The Minister justifies the removal on the basis of the limited use of the provision:

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 5

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

… the Bill’s amendments will remove the limited immunity available in respect of industrial action taken in support of a claim for an AWA. The AWA industrial action provisions appear to have rarely been threatened, let alone used.4

Access to protected industrial action by non-unionists seeking a collective certified agreement is similarly rare, however they will have to conduct secret ballots prior to taking industrial action if a companion Bill is passed by Parliament.5 The Ministerial Implementation Paper Discussion Paper which outlined a future legislative sketch for the implementation of the Coalition’s More Jobs Better Pay policy (1998) did propose that:

Provisions enabling protected industrial action to be taken in the negotiation of AWAs would be repealed as they are not relevant to the negotiation of individual, as distinct from collective, agreements.6

However the AWA protected industrial action provisions have been used in at least one significant lock-out of employees. In its report on the Workplace Relations and Other Legislation Amendment Bill 1996, the majority report of the Senate Economics Reference Committee commented on the potential unfairness of allowing employers the ability to lock-out employees during AWA negotiations:

[A] concern raised has been the availability of protected action in relation to the negotiation of AWAs. It was suggested that there was a manifest unfairness in giving an employer the ability to lock-out individuals in relation to the negotiation of an AWA. It was suggested that not only was it a clearly unfair use of bargaining power but it also made a mockery of the prohibition of duress in relation to the entering of AWAs.7

This concern has been borne out in subsequent events. AWA protected industrial action was initiated by the G.& K .O’Connor abattoir in Victoria against its employees in 1998/99. The AWA industrial action followed previous industrial action over the negotiation of a certified agreement with the relevant union. The Federal Court upheld the employer’s right to use AWA protected industrial action against its employees. The notice of the lock-out was in writing and contained its proposed duration, which was every day until agreement was reached. Later an application was made to the AIRC to stop AWA protected action. An AIRC Full Bench found that it had the jurisdiction to order that the AWA action cease. In passing it noted that some employees had suffered considerably being deprived of their principal income for some eight months.8 This Bill will address such an outcome by removing the ability of either party to take industrial action with the protection of limited immunity.

In the case of Schanka v Employment National (Administration) Ltd [2000] FCA 2000 the question of illegality of applying duress during the making of an AWA was considered. The Federal Court affirmed that duress in making an AWA may occur even though the person subject to the duress does not enter the AWA. Section 170VV of the WR Act provides that an application for an order imposing a penalty on a person, relating to an AWA, may be made by a ‘party to the AWA’. The Court found that this could extend to a ‘party to negotiations’. The Court commented that Employment National's proposed

6 Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

interpretation would allow even the most reprehensible conduct engaged in by a party in relation to a proposed AWA to go unexamined by a court if no concluded agreement were to come into existence.9 This Bill appears to make no substantial amendment on these matters although does attempt to prevent a ‘contravention’ of a provision of Part VI being treated as an ‘offence’.

It might be noted that one new development in the AWA Procedures Bill 2000, not evident in the ‘More Jobs Better Pay’ Bill is the intention to weaken the transmission of business provisions in respect of AWAs and to enhance the discretion and authority of the EA as to whether a new proprietor or owner is bound by an old AWA. (Proposed section 170VDD).

It might be also noted that the secrecy provisions concerning the disclosure of AWAs or their contents by the EA have been of recurring interest and concern to the Senate Employment, Workplace Relations, Small Business and Education Committee. The issue in part concerns whether the EA has been ‘directed’ by the Minister not release details of the first 100 AWAs filed, as the EA initially believe he was authorised by the WR Act to release the information to the Senate Committee.10 Section 170BS of the WR Act allows the EA to publish parts of an AWA. Minister Reith however, believed that AWAs should not be ‘handed out as a hit list to unions’.11 (transcript) AWAs have also been extensively used in the Australian Public Service to set pay and conditions for its (mainly) senior executives and this has raised public interest questions over the restricted access to these agreements. (Note that section 170VG(2) prevents an AWA containing a provision which prevents disclosure of its provisions).

Main Provisions

New section 170VBA introduces a cooling-off period in subsections (6) and (7) for employees whose remuneration is below $68 000.

New subsection 170VBB(3) allows the AIRC to settle disputes about the interpretation of an AWA where that power is conferred on the Commission by the AWA.

New subsection 170VC(2) requires that an application within 60 days of it’s start date. Where an employee’s remuneration is above $68 000 he or she may request the EA to assess the AWA against the NDT [section 170 VC(4)].

New subsections 170VC(6) and (7) set out requirements for an employee to withdraw consent to an AWA.

New subsection 170VCB(2) provides that where an AWA is accompanied to by a declaration that the employee’s remuneration is above $68 000, it will be taken to have passed the NDT. Further, subsections 170VCB and 170VCC empower the EA to approve an AWA, or assess an AWA against principles to be determined by the President of the AIRC where an AWA is not contrary to the public interest.

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 7

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

New section 170VD sets out the effect that AWAs have over other awards or agreements. New subsection 170VD(5) and (6) provide that an AWA prevails over any relevant certified agreement, unless the AWA includes a provision preventing such application, and that a certified agreement can only prevail over an AWA after the AWAS expiry where the Certified Agreement makes express provision.

New subsection 170VDA(2) allow AWA provisions to operate subject to certain State laws concerning for example, occupational health and safety etc.

New subsection 170VDD(2) provides situations where a business is sold to another owner, the new owner will not necessarily be bound by an AWA. The EA may make an order re the business transmitted (or part of it) that the old AWA applies, or a part of it applies. The ‘parties’ may make submissions to the EA.

Under WR Act, paragraph 149 (1)(d) an award is binding upon any successor, assignee, or transmittee to the business and these provisions have been the subject of litigation in recent years as businesses have sought to access outsourcing opportunities, usually with the intent of cutting labour costs. Similar transmission provisions apply to certified agreements. Currently under section 170VS an AWA binds a successor, so this new provision is a major change.

Item 3 of Schedule 1: New subsection 170VV(3) would allow the EA to make an application for a penalty order to a court.

Item 9 of Schedule 1 repeals Division 8 of Part VID which confers limited immunity for certain industrial action in an AWA negotiation process.

Concluding Comments

The criticisms of the operation of AWAs which have come from unions have concerned the questions of duress to sign an AWA and judgements of the EA about accepting the ‘relevant’ or ‘designated’ award (often chosen by an employer) which may be used as the basis for the NDT. This Bill does not change either situation, although it must be conceded that the introduction of a cooling-off period enabling an employee to withdraw from an AWA appears warranted.

Similarly, the removal of limited immunity for industrial action in the course of negotiating an AWA is an improvement and returns the AWA making process back to a more consensually based model. The role of the AIRC in approving otherwise dubious AWAs is replaced with an enhanced role for the EA.

The requirement for the same AWA to be offered to employees doing similar work is to be dropped thus potentially broadening the scope of ‘performance pay’ in the workplace. The other interesting proposal, not well explained, is the opportunity of a successor to a

8 Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

business operating under an AWA to be free of the obligations imposed by an AWA if the EA can be persuaded to this effect.

Endnotes

1 In his Second Reading Speech for this Bill, the Minister inadvertently refers to the ‘More Jobs Better Pay’ Bill passing the House of Representatives on 14 October 1999. This is not correct.

2 The Hon Peter Reith MP, Second Reading Speech 'The Workplace Relations and Other Legislation Amendment Bill 1996', House of Representatives Hansard, 23 May 1996, p. 1295.

3 The Hon Peter Reith MP, Second Reading Speech, 'The Workplace Relations Legislation Amendment (More Jobs Better Pay) Bill 1999', House of Representatives Hansard, 30 June 1999, p. 7852.

4 The Hon Peter Reith MP, Second Reading Speech 'The Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000', House of Representatives Hansard, 28 June 2000, p. 18402.

5 Refer to 'Workplace Relations Amendment (Secret Ballots for Protected Action) Bill 2000', under Item 23.

6 The Hon Peter Reith MP, The continuing reform of workplace relations: Implementation of ‘More Jobs Better Pay’, (May 1999) p. 24.

7 Senate Economic References Committee, Report on the Consideration of the Workplace Relations and Other Amendments Legislation Bill 1996, August 1996, p. 200.

8 Australian Industrial Relations Commission, Print S 2371, 12 January 2000. This Full Bench decision upheld a previous decision of Justice Boulton.

9 CCH Australian Industrial Law Reports at par. 4-226 ‘Meaning of duress in relation to an AWA’.

10 ‘Workplace contracts ‘not secret’, The Australian Financial Review, 5 May 2000.

11 The Hon Peter Reith MP, Press Release, 11 May 2000.

Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 9

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contact Officer Steve O'Neill 18 August 2000 Bills Digest Service Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.