Questions & Answers - Transitional arrangements

Question:

From 1 Jan 2010, with the long service leave provisions from our NAPSA continue?

Answer:

Yes, but if a modern award covers the NAPSA employees on 1 Jan 2010, then the NAPSA will cease to apply. All NAPSAs terminate on 1 January 2014. Modern awards will not contain LSL provisions.

Question:

We have collective agreements that have been extended to 2011 & 2012. I am after confirmation please that the conditions in the new underpinning modern award where more favourable than those in our existing collective agreement will not have any force until the agreements expire or are renegotiated.

Also confirmation please that the conditions of the National Employment Standards if/where more favourable will apply from 1/1/2010.

Answer:

Yes the EBA (and we are assuming that it is a pre Work Choices collective agreement) will prevail over the modern award where there is inconsistency – but otherwise the modern award will underpin the EBA.

Also, the conditions of the National Employment Standards if/where more favourable will apply from 1/1/2010.

Question:

1. It appears that a couple of our admin staff did not have their ITEAs lodged successfully with the Workplace Authority. All employees commenced with our firm before 1 July 2009. I understand this means that the C&A Award is actually applicable to them rather than the conditions of the ITEA unless we set up an Enterprise Agreement. Is this correct?
2. Until we set up an Enterprise Agreement and have it approved, does this mean that we must pay entitlements under the Award such as leave loading? If so, does this extend from when they started their employment with us (given the ITEA is missing)?
3. Also does the fact that the employees are paid above Award make any difference to our situation or their entitlements under the Award?

Answer:

1. Yes, but you can still make ITEAs until the end of this year.
2. Yes.
3. If you had something in the employment contract or ITEA along the lines of “Your hourly rate includes payment for all loadings, penalties and allowances that you might otherwise be entitled to”, then you may be able to rely on that over award payment, if it is enough after working out actual entitlements based on time and wage records, without having making back pay.

Question:

Please could you tell me about the type of employment contracts now suitable? Are AWAs and Greenfield agreements now redundant? Are common law contracts the best way to go or are there award contracts?

Answer:

You cannot make AWAs anymore, although for the remainder of this year you can make Individual Transitional Employment Agreements, which are like AWAs. Greenfield agreements can only be made with unions. You can only make collective agreements under legislation. It does not sound like you need to make any statutory agreements, rather simply use individual employment contracts. Next year you can make flexibility agreements under modern awards to modify the impact of the award (e.g. cash out annual leave loading).These stand alongside employment contracts.

Question:

How will the introduction of NES impact on pre-Fair Work agreements?

Answer:

Terms in all existing statutory agreements cannot make provision that is less favourable than a corresponding provision in the NES.

Question:

We are currently trying to make our budgets fit for next year and need to make substantial savings on our wages bill. Staff covered by the Certified Agreement are entitled to 5 weeks annual leave per annum. We want to ask them to accept a reduction to 4 weeks leave next year which would help us avoid redundancies. Are we breaching the Fair Work Act by asking staff to accrue/ take less leave than they are entitled to?

Answer:

Yes, in the absence of a cashing out provision you need to recognise the 5 weeks’ annual leave. If it is a pre-work choices certified agreement you have until the end of this year to vary it by agreement with the employees covered (and any union party).

Question:

1. Can you extend an existing collective agreement registered before 1 July 09? If yes, for how long? If yes, will the tests under the previous legislation apply i.e. NDT and prohibitive content?
2. When varying an existing transitionary collective agreement, do the previous legislative tests apply i.e. NDT and prohibited content?

Answer:

1. Yes, you can extend an existing collective agreement as long as it is a pre-reform agreement i.e. it was made before the introduction of WorkChoices on 27 March 2006. It can be extended until 2011. However the no disadvantage test and the prohibited content requirements will not apply.
2. The no disadvantage test does apply, however the prohibited content rules do not.

Question:

I have 6 employees on AWA's and need to place them under another Industrial Agreement. All other staff sit under the current NAPSA Club Employees State Award. Can I move them onto this award with separate conditions which match the conditions stated in the AWA (i.e. cash out leave, higher salary, less allowances) or will they be subject to the BOOT test if I move them onto the AWARD and place them on a VEA as per state award allows.

Answer:

You can:

1. allow the AWAs to continue to operate. Unless terminated or replaced, the NAPSA will not apply this year and the modern award (Registered and Licensed Cubs Award 2010) will not apply next year and thereafter to those employees (although the National Employment Standards (NES) and the base rates in the modern award will prevail on and from 1 January 2010 to the extent of inconsistency with the AWAs);
2. replace the AWAs this year with Individual Transitional Employment Agreements (ITEAs), which are made subject to the no-disadvantage test adopting the NAPSA as the benchmark. While these cannot have a nominal expiry date beyond 31 December 2009 they will operate in the same way as AWAs;
3. subject to approval of Fair Work Australia, terminate the AWA, either unilaterally on 90 days notice or with the employees' agreement, and apply the NAPSA this year and the modern award next year and thereafter. Once this is done you will not be able to apply the AWA conditions this year. The modern award does not include a cashing out provision. However, clause 7 will permit you to make award flexibility agreements with individual employees to pay over award rates in lieu of award loadings, allowances etc.

Question:

My organisation are respondent to several different Federal Transitional Awards. Which jurisdiction are we in, Federal or State?

Answer:

If you are subject to a federal transitional award that means that you are not a constitutional corporation but you were bound by a federal award at the time Work Choices commenced on 26 March 2006. Different rules govern the operation of these awards after 1 January 2010, depending on what kind of employer you are, and whether you are in a State that refers its IR powers to the Commonwealth, but generally speaking they continue to apply.

Question:

In order to terminate the AWAs by 31 December 2009 I need to give 90 days notice under Fair Work Australia. Is this correct? Is there a standard format for this I can obtain to send employees such a notice? And is the 90 days notice from date of termination being submitted, or can I submit to terminate to FWA once I give notice to the employee? Finally if we will be moving the staff onto a NAPSA before the new award comes into effect and since some conditions will differ to their original AWA is it best to advise them to seek advise before we offer this or will we need to renegotiate with union involvement to move them off AWAs?

Answer:

It depends on whether the termination is unilateral or by agreement.

Termination by agreement:
The parties must apply to Fair Work Australia to approve the termination of the AWA. This application must be signed by both parties. The application for approval must be made within 14 days of making the termination agreement (which is essentially a written agreement between the employer and employees - signed by both parties and witnessed) or a longer period if FWA allows. It must be in the Form 29 which can be found on the Fair Work Australia website at www.fwa.gov.au.

Unilateral termination:
If the employer or employee moves to terminate the AWA unilaterally, then an application must be made to Fair Work Australia to approve the termination. This must also be in Form 29. However, please note that before the application can be made the party wishing to terminate the AWA (employer or employee) must give the other party a notice that complies with the following requirements:

• the notice must identify the AWA;
• the notice must state that the employer or employee intends to apply to FWA for approval of the termination of the AWA;
• the notice must state that if FWA approves the termination, the AWA will terminate on the 90th day after the day on which FWA makes the approval decision;
• if the notice is given by the employer:
  1. the notice must state whether, if the AWA terminates during the bridging period, one or more redundancy provisions in the AWA will continue to apply to the employee as provided for by item 38; and
  2. if one or more redundancy provisions in the instrument will so continue to apply to the employee - the notice must include or be accompanied by a copy of the provision or provisions.

This notice must be given at least 14 days before an application to FWA can be made. The application must then be accompanied by a statutory declaration which states that the relevant party has complied with notice requirements. If the employees do not agree to terminate the AWA, as unilateral termination will have no effect for at least 104 days (90 + 14 for the notice) the employees will be bound by any relevant Modern Award once the AWA ceases to operate. They will not be bound by a NAPSA.

Question:

I have six employees that are engaged on AWAs. Their agreements have been signed either in the year 2001 or 2003. They were never offered ITEAs and the AWA has no expiry date. Are you able to provide some guidance or things that I need to consider before we ask the people to consider Individual Agreements.

And if we choose to terminate will these AWA's need to be terminated with the Workplace Authority or FWA and if so by when.

Answer:

There are a number of issues that you will need to consider before terminating the agreements and offering new employment arrangements. The first is how the AWAs can be validly terminated. AWAs required a nominal expiry date to be valid and it would be unusual if this was not the case. You should check with Fair Work Australia (FWA), which has now replaced the Workplace Authority, to provide you with information regarding the nominal expiry date of the AWAs. To terminate AWAs made before 27 March 2006 (called pre-reform AWAs), the parties must apply to FWA to approve the termination of the AWA. This application must be made within 14 days of the employer and employee making the termination agreement. You should consult with FWA regarding the use of Form F29 (Application for Approval of Termination of Individual Agreement-based Transitional Instrument by Agreement), which is available on the FWA website, to terminate the AWAs in question after they have checked the nominal expiry date. Before asking people to consider individual agreements you should seek some advice on matters including:

• whether any awards (including the modern awards) cover your employees;
• the particular terms and conditions you wish to cover in the agreement;
• the nature of the National Employment Standards contained in the Fair Work Act which contain the minimum terms and conditions of employment of all employees effective from 1 January 2010 ;
• provisions contained in modern awards that may cover your employees from 1 January 2010;
• existing workplace policies and procedures;
• whether the employees can seek a bargaining order for you to bargain for a collective agreement.

Question:

Come the 1/1/2010, what will happen with ITEAs? If our collective agreement is already in place will the ITEAs drop dead or do they need to be terminated by either party giving a notice period?

Answer:

If your collective agreement is made while the ITEA is still operative the collective agreement will not apply to the employee on the ITEA, and the ITEA will continue to operate until terminated, at which time the collective agreement will apply to the employee.

If the collective agreement is made after the nominal expiry date of the ITEA it will replace (terminate) the ITEA.

An ITEA can be terminated at any time by consent of both parties, or by either party giving the other party 90 days notice, or by any party at any time after the nominal expiry date of the ITEA.

Question:

Just wanted to check what happens to ITEAs after 31 December 2009. I presume it is like when AWAs were no longer able to be used in that no new ITEA's will be able to be made after 31 December. Like AWAs though, will ITEAs in place before 31 December still stay live after that date, until such time as they are terminated? Or will new arrangements need to be put in place and ready for 1 January 2010 for anyone currently on an ITEA?

Answer:

That is correct. ITEAs will remain on foot, until such time as they are terminated. In order to terminate an ITEA, the parties to it must agree in writing, the agreement must be signed by both parties, the signatures must be witnessed and the agreement must be approved by Fair Work Australia (FWA). The application for termination of the ITEA must be made to FWA within 14 days of the agreement being made to terminate the agreement. The termination will operate from the day FWA issues the decision to terminate the ITEA.