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Award simplification.

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Parliament House

Canberra ACT 2600


28 June 1998




A key element of the Workplace Relations Act, namely Award Sim plification, will be in operation from 1 July, 1998.


Attached is a background statement which outlines the process and canvasses some of the issues associated with Award Simplification.


For further information contact:    Ian Hanke 0419 484 095






Overall intention


The Government's intention with respect to the role of awards was articulated as follows in my Second Reading Speech to Parliament on 23 May 1996 for the Workplace Relations and Other Legislation Amendment Bill


"The object of the Workplace Relations Act focuses on giving primary responsibility for industrial relations and agreement-making to employers and employees at the enterprise and workplace level with the corresponding role fo r the award system being to provide a safety net of minimum wages and conditions." (p.4)


I went on to note that "the Commission, the scope of awards, and arrangements for their adjustment, need to be consistent with and reinforce the role of awards as a g enuine safety net." (p.5)


The clear intention of the Act is that awards are to protect minimum standards for workers as they move to agreements, as the Explanatory Memorandum to the Workplace Relations and Other Legislation Amendment (WROLA) Bill notes:


"Under s.88B(b) ….. Subsection (1) reinforces the Commission's role in ensuring that awards continue to operate as a safety net within a framework which emphasises the setting of minima."


Allowable matters


Section 89A of the Workplace Relations Act further clarifies the role of awards by establishing the scope of industrial disputes. The intention of this section is to specifically limit the jurisdiction of the Commission, in the exercise of arbitral and award-making powers, to only those matters which are listed in subsection (2), as outlined in the Second Reading Speech:


"Consistent with the focus of awards on safety net minimum wages and conditions, the Commission's jurisdiction (and thus the capacity of the parties) to incorporate matters in award s will be confined to certain allowable matters." (p.6)


In addition to allowable matters, the Act also provides that the Australian Industrial Relations Commission (AIRC) may include matters that are incidental to an allowable matter and necessary for the effective operation of the award. The Explanatory Memorandum clarifies the intention of this provision by noting that it would "ensure that the scope of the allowable matters is not expanded" (p. 25).


The legislation is also intended to promote the spre ad of regular part-time work and allows for the inclusion of model anti-discrimination clauses in awards.


Award simplification process


The Workplace Relations and Other Legislation Amendment (WROLA) Act provides a process for simplifying existing awards, under Items 47 to 54 of Schedule 5. These provisions established an interim period of 18 months for the orderly transition of awards to bring them into line with the new scheme, through the initiative of the award parties. Item 47 of Schedule 5 emphasised the desirability of simplifying awards prior to the end of the interim period, ie 30 June 1998.


As outlined in Item 49, simplification of awards is intended to not only reduce the matters covered in awards to those that are allowable (or incidental and necessary) but also to meet a number of other criteria such as making them simpler, more flexible, and easier to understand, and ensuring that they do not hinder productivity or efficiency.


Paid rates awards


In line with the overall object of the Act, the clear scheme of the legislation is for a system of awards which specify minimum rates of pay. Sub-items 49(5) and 49(6) of the transitional provisions in WROLA Act give the AIRC the discretion to convert awards which are not operating as minimum rates awards during the 18-month transition period to provide for minimum rates of pay.


The AIRC, in its April 1998 Safety Net Review decision, announced it would establish a Full Bench to review the operation of paid rates awards to resolve this and other issues relating to paid rates awards. An initial conference of the parties was held on 27 May 1998 and in a statement released following the conference the Commission announced the issues that would be examined by the review.


Award Simplification Progress


In March 1998 the President of the AIRC established a separate panel to deal with award simplification. The panel is comprised of six commissioners and is headed up by a Senior Deputy President. In March the AIRC published a list of approximately 400 awards across a range of industries which were being dealt with this panel. Most of these awards have been called up on the Commission's own motion (under s.33(a) of the Act) to commence the process of simplification and most have been before the commission for programming or conference.


Despite the activity of this panel, the process of award simplification has been slow. The Australian Industrial Registry advises that as at 31 May 1998, simplification has only been completed for three awards. There have been six other decisions concerning the simplification of awards and I am aware that there may be a number of other awards close to finalisation of the simplification process, including in the Australian Public Service. In terms of overall activity, the Registry also advises that a total of 712 awards are currently being simplified, including 438 by the special Award Simplification Panel. 18 awards have been set aside. Of the remaining federal awards, 1,146 cover wages and conditions, 543 are single-issue awards and the Commission has identified 778 for review as they may no longer have any continuing or substantially continuing operation. Many of these awards are likely to be cancelled.


Outcomes from decisions


The decisions to date on simplifying awards provide substantial guidance to the industrial parties on how the legislation is being applied by the Commission. The key decision to date is the Award Simplification Decision of the Full Bench handed down on 23 December 1997. This decision simplified the Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1995 and provided more general guidance on a range of matters that has assisted the process of award simplification by:


• establishing principles to guide the process. While these are not as detailed as those sought by the Joint Governments, they provide guidance on t he content of allowable matters, identify revised model clauses, provide clearly for use of items 49(7)(b) and (c) and encourage joint consideration of items 49 (7) and (8) along with allowable matters.


• concluding that s89A(6) is a limitation on the Commission's power to arbitrate, rather than a grant of legislative power contended by the unions


• providing a new approach to facilitative provisions which removes the need for majority agreement (agreement can now be made with individual employees)


• endorsing an approach to part-time employment in respect to the hospitality award, which provides a clear distinction between regular part-time employment and casual employment.


In respect of the hospitality award itself, the decision achieved the followi ng:


• a number of non-allowable matters were deleted from the award clearly establishing the non-allowability of some matters that appear in many awards eg amenities/first aid kits, limits on proportions of juniors, and aspects of termination, change and redundancy provisions


• three new facilitative provisions were added to the award, including two only requiring agreement between employers and individual employees


• a range of obsolete matters and matters of detail and process were removed so the award is less prescriptive and easier to understand


• the distinction between part-time and casual employees was clearly articulated with the provision of regular part-time work.


The other key award to be simplified is the Metal Industry Award 1984 . This was a long, detailed and relatively complex award. The outcomes from the decision on simplification of this award by the Commission on 11 March 1998 were as follows:


• the award was vastly reduced, including the removal of a lengthy and detailed Appendix relating to implementation of competency-based classification structures, and it was substantially improved in terms of being expressed in plain English and simpler i n structure


• over 150 sub-clauses were removed from the award, many of which were obsolete, repetitive, unnecessary or matters of detail, including


• right of entry for union officials, a range of special rates, detailed apprenticeship provisions, aspects of parental and annual leave, aspects of competency standards implementation and unfair dismissal


• 10 facilitative provisions were added to the award - of particular note are a number related to hours of work - and another 9 existing provisions were enhanced


• a number of the provisions provide for agreement between employers and individual employees.


An important decision has also been taken in respect to the simplification of the main coal industry award. In its decision in regard to allowable matters, the Commission ruled that the provision for "the last to come the first to go" in relation to redundancy is not allowable, nor incidental and necessary to the operation of the award.


Implications for the period ahead


The legislation provided an eighteen-month transition period for the simplification of awards. This was intended to allow time for the parties to simplify their awards to meet the new requirements of the Workplace Relations Act. This should have been ample time for this purpose. The fact that so few awards have actually been simplified, despite the great deal of activity that has in the main been driven by the Commission, is no surprise. My advice is that where employers have sought to simplify awards, the slow progress largely reflects a non-cooperative approach taken by the unions. The reason we put a time limit on the process was to ensure that we did not have a repeat of the outcome from the review of awards process under the previous Act (ie the s.150A Review of Awards) where only 26 awards were at least partially completed in almost three years.


That the unions have taken this approach is typical. It is a stance that is not in the best interests of its members given the way the legislation impacts on awards after the transition period. For example, from 1 July for all awards that have not been simplified at that date, only the matters identified in the Act as allowable matters will continue to have the force of law. This means that a range of matters that are incidental to the allowable matter and necessary for the effective operation of the award will no longer by enforceable. The legislation also requires the Commission, as soon as practicable after this date, to remove all matters other than allowable matters from each award that was in existence at the beginning of the transitional period and that has not been simplified during that period.


The unions have continually referred to the simplification process as 'stripping' of award entitlements. Any reasonable analysis of those awards that have been simplified reveals that such allegations are simply not true. Rather it has reframed awards to be less prescriptive in the application of entitlements; to provide for more flexible working arrangements while retaining worker protections; and to make them more user friendly and easy to understand. For example, in simplifying the main hospitality award, the Commission clarified the delineation between regular part-time employment and casual employment and streamlined clauses in relation to termination, redundancy, parental leave and personal leave. Another example is the newly simplified metal industry award which now contains a range of additional flexibilities in relation to hours of work but without a lot of unnecessary detail. This award is now much shorter and easier to understand while retaining all key entitlements including in relation to pay, leave, hours of work and the employment relationship.


The Government in submissions before the Commission and on other occasions has exhorted the parties to undertake the award simplification process expeditiously. There is no justifiable reason for the unions to have approached award simplification in the way that they have.


From July 1 the effect will be that awards will change from their current form as only allowable matters will be enforceable. If the parties want matters that are incidental to an allowable matter and necessary for the effective operation of the award to be incorporated then they will have to make out their case before the Australian Industrial Relations Commission. The onus is now on the parties.