Express law No. 69

1 April 2008

New agreement-making framework under the Workplace Relations
Act 1996

The Australian Government's first stage of reforms
to the Workplace Relations Act 1996–the Workplace
Relations Amendment (Transition to Forward with Fairness)
Act 2008
(the Transition Act)–commenced on
28 March 2008. The Transition Act begins the transition
to the government's new workplace relations system,
which is expected to commence in 2010.


The Transition Act was enacted on 28 March 2008 and establishes
a new agreement-making framework for employers and employees
within the federal system. Most significantly, Australian
Workplace Agreements (AWAs) may no longer be made under
the Workplace Relations Act, and the fairness test has
been repealed and replaced with the 'no-disadvantage

Summary of significant amendments

No new Australian Workplace Agreements

As from 28 March 2008, an employer and employee may no
longer make an AWA. However, AWAs lodged before the commencement
of the Transition Act will not be affected by the changes,
except that an existing AWA may be varied only in limited
circumstances. This means that an existing AWA cannot be
varied to increase an employee's salary; new workplace
arrangements will need to be made.

New Individual Transitional Employment Agreement to be

The Transition Act has created a new statutory individual
agreement: the Individual Transitional Employment Agreement
(ITEA). An ITEA may be made by an employer and a new or
existing employee, where the employer employed at least
one employee under a federal individual instrument on 1
December 2007. This means that individual agreement making
cannot be introduced into a workplace that has not previously
had that type of arrangement in place.

Like AWAs, an ITEA made with a new employee commences
from lodgement with the Workplace Authority (as do greenfields
workplace agreements–that is, agreements made before
staff are employed). However, an ITEA made with an existing
employee, and new collective agreements, now commence operation
on approval by the Workplace Authority.

Generally speaking, ITEAs operate very similarly to AWAs.
They may be terminated in the same ways, including by unilateral
termination with 90 days' notice; the duress and
prohibited content rules apply; and an ITEA in operation
excludes the application of an award. An ITEA may also
transmit to bind a new employer on transmission of business.

New no-disadvantage test will apply to agreements

The fairness test has been replaced with the no-disadvantage
test. The no-disadvantage test, applied by the Workplace
Authority, ensures that a new ITEA or collective agreement
will either cease to operate or not be approved (as the
case may be) if the agreement would result in the 'overall
reduction of the terms and conditions of the employee',
or employees, bound by the agreement.

Similar to the no-disadvantage test that applied under
the pre-reform Workplace Relations Act, the new test is
a global one that considers the overall effect of the workplace
agreement on the employee, as compared to the industrial
instrument that would otherwise apply–for example,
a pre-reform certified agreement or award. This is in contrast
to the fairness test, which considered only whether the
new workplace agreement provided adequate compensation
to an employee in lieu of the exclusion or modification
of protected award conditions.

The new test also takes into account an employee's
long service leave entitlements under a state or territory
law. This means, unlike under the fairness test, an employee
cannot 'trade off' long service leave entitlements
without compensation in return.

Award modernisation process to commence

The Transition Act has enabled the Australian Industrial
Relations Commission to commence award modernisation. This
process is intended to reduce the current number of federal
awards and notional agreements preserving state awards
(NAPSAs) and produce streamlined, simplified awards dealing
with, at most, 20 allowable matters. One of the allowable
matters is wages: wages will no longer be set by Australian
Pay and Classification Scales.

Award modernisation is expected to be completed by the
Australian Industrial Relations Commission by the commencement
of the substantial reforms at the beginning of 2010.
Australian Fair Pay Commission's role reduced

The Transition Act has removed substantial powers from
the Australian Fair Pay Commission. Most significantly,
the commission can no longer make new pay scales, nor can
it undertake wage reviews.

Pre-reform certified agreements and preserved collective
state agreements can be varied or extended

The Transition Act allows for the variation and extension
of pre-reform certified agreements and preserved collective
state agreements–that is, collective agreements made
before the Work Choices amendments. Variations made to
these agreements must also pass the no-disadvantage test.

Other amendments

Before the commencement of the Transition Act, if an employee
was bound by a workplace agreement and that agreement ceased
to apply, the employee's terms and conditions would
be determined by the Australian Fair Pay and Conditions
Standard and any 'protected award conditions' until
a new agreement was made.

Now, when an employee is no longer bound by a workplace
agreement, the employee will 'fall back' to,
for example, another workplace agreement, a pre-reform
certified agreement or an award. Protected award conditions
no longer exist.

This change has also been reflected in the transmission
of business provisions. Now, at the end of the 12-month
transmission period, a transferred employee can become
bound by, for example, the new employer's existing
pre-reform certified agreement or a NAPSA. This was not
possible before the introduction of the Fairness Act.

Last, the Transition Act has extended the life of NAPSAs
and transitionally registered organisations until 31 December
2009. Both would otherwise have ceased to apply on 27 March

Implications for clients

The Australian Government Employment Bargaining Framework,
published in February 2008, sets out Australian Government
policy for workplace relations arrangements within the
Australian Public Service and provides that AWAs and ITEAs
may not be offered to APS employees. This means that, even
before the repeal of AWAs by the Transition Act, the use
of individual statutory agreements for APS employees was

In the absence of AWAs, agencies must now consider alternative
arrangements, such as individual common law contracts and
determinations made under s 24(1) of the Public Service
Act 1999, to determine terms and conditions of employment
for employees who would have otherwise made AWAs. Agencies
should seek advice on the implications of the new agreement-making
framework in relation to their particular workplace practices.

It is also important to note that, although existing AWAs
continue to operate, variations to the AWA may not be made.
Further, when an employee ceases to be covered by an AWA,
a collective agreement, a pre-reform certified agreement
or the Australian Public Service Award 1998 may begin to
apply to that employee.

Next step in federal workplace relations reform

The Australian Government has announced that it intends
to substantially reform the workplace relations system
by 2010. The next bill, anticipated for introduction into
Parliament sometime early next year, is expected to reinstate
the powers of the Australian Industrial Relations Commission,
introduce 10 key minimum entitlements (the National Employment
Standards), create modern, simple awards and overhaul the
unfair dismissal regime.

AGS is again involved in the development of the reforms,
with AGS lawyer Jenny Burnett outposted to the Department
of Education, Employment and Workplace Relations to advise
on the drafting of the new legislation.

AGS is currently presenting a series of Government Law
Group seminars across Australia on the Transition Act and
the APS bargaining framework. For further information on
these seminars, please see the AGS

For further information please contact:

Leah Edwards
Senior General Counsel
T 02 6253 7090 F 02 6253 7304

Amanda Johnston
T 02 6253 7591 F 02 6253 7304

Jim Heard
Senior Executive Lawyer
T 02 9581 7477 F 02 9581 7413

Rodger Prince
Senior Executive Lawyer
T 08 8205 4218 F 08 8205 4499

Craig Rawson
Senior Executive Lawyer
T 03 9242 1248 F 03 9242 1317

Important: The material in Express law is
provided to clients as an early, interim view for general
information only, and further analysis on the matter
may be prepared by AGS. The material should not be
relied upon for the purpose of a particular matter.
Please contact AGS before any action or decision is
taken on the basis of any of the material in this message.