On 4 July 2007, the Minister for Employment and Workplace Relations, The Hon. Joe Hockey MP, released the Workplace Relations Fact Sheet following the introduction of the Fairness Test under the Workplace Relations Amendment (A Stronger Safety Net) Act, 2007 on 28 June 2007.
The Fact Sheet contains information on employee entitlements, including the Australian Fair Pay and Conditions Standard, support services and basic protections for working Australians. It also provides an overview of the Fairness Test.
The Fairness Test
The Fairness Test applies to all workplace agreements and variations to workplace agreements lodged on or after 7 May 2007 that remove or change certain protected conditions.
The Government’s stated intent behind the Fairness Test is to deal with reports that a great majority of workplace agreements lodged since the WorkChoices reforms, have removed or modified the “protected award conditions” described in the Workplace Relations Act, 2006.
The Fairness Test aims to ensure that employees receive fair compensation if their Australian Workplace Agreement (AWA) or collective agreement removes or modifies protected conditions, such as:
- penalty rates including working on public holidays and weekends;
- shift and overtime loadings;
- monetary allowances;
- annual leave loadings;
- public holidays;
- rest breaks;
- incentive-based payments; and
- bonuses.
The Fairness Test only applies to AWAs for people earning less than $75,000 or more per year.
How will the Fairness Test be applied?
The Fairness Test will involve an assessment by the Workplace Authority as to whether a workplace agreement modifies or removes any or all of an employee’s previously protected award conditions and, if so, whether the employee is fairly compensated.
In establishing what is “fair compensation”, the Workplace Authority will take into account:
- monetary and non-monetary compensation; and
- work obligations of the employee(s), such as shift or weekend work.
The Workplace Authority may also consider the personal circumstances of the employee(s), including their family responsibilities. In exceptional circumstances the Workplace Authority may also consider other factors, specifically the industry, location and economic circumstances of the employer or the employment circumstances of the employee(s).
If an agreement does not pass the Fairness Test, the employer and employee(s) will be notified in writing. The employer and employee(s) will have 14 days to vary the workplace agreement so that it fairly compensates the employee(s) and the employer will have an obligation to pay any back-pay. If they do not do so the agreement will be void.
What this means for employers
Employers that wish to have employees on workplace agreements will now need to comply with the fairness test. This will require an analysis of whether the removal of protected award conditions have been traded for fair compensation in return. This will not always be a simple analysis depending upon the type of work involved.
Furthermore all employers will be required to provide the fact sheet as set above from 20 July 2007 onwards.
For new employees, they must receive it within 7 days of commencing work. For current employees, the Fact Sheet must be provided by 20 October 2007.
A copy of the Fact Sheet can be accessed via the Workplace Authority website www.workplaceauthority.gov.au
To find out more about these changes or discuss the implementation of these changes to your business, please contact Andrew Bland at [email protected].