The Federal Government announced on Friday some significant changes to the WorkChoices legislation.

A brief summary of the changes are

• An introduction of a “fairness test” for award based employees that earn less that $75 000 per year
• In the case of a collective agreement, the fairness test will automatically apply to industries that are covered by an award.
• If an AWA or Collective agreement removes or modifies certain Protected Award conditions the employee is entitled to “fair compensation”.
• Protected award conditions are Penalty rates, shift and overtime loadings, monetary allowances, annual leave loading, public holidays, rest breaks and incentive based payments and bonuses
• The Fairness test will examine monetary or non-monetary compensation offered relative to what would have been payable under the relevant award. For example a higher rate of pay may be offered to offset removal of certain protected award conditions
• Fair Compensation – matters to be taken into account may be work obligations, industry, location, economic circumstances of the business and the specific circumstances of the employee. All arrangements and entitlements shall be taken into account in deciding this issue
• The changes will take effect for all workplace agreements lodged on or after 7 May 2007. All existing workplace agreements at that date will not be subject to the changes

What this means for employers

• Employers considering introducing AWAs or collective agreements will now need to comply with these changes.
• Employers will need to show that they are providing some benefit to the employee to offset the removal of these protected award conditions. There is no detail at present that defines what that may be but may either be monetary or non monetary compensation. For example, an arrangement to allow flexible working hours might be viewed as a form of compensation
• Employers who do not comply may be subject to back pay claims from the date of the agreement.