Workplace Relations in Australia
Australia’s modern, competitive economy is underpinned by a flexible workplace relations system which links productivity to remuneration and promotes innovation and efficiency gains in individual workplaces. Workers and employers can negotiate flexible local agreements and industries can respond competitively to global challenges.
Overview
In the 1970s, adverse movements in the terms of trade together with oil price shocks greatly diminished the capacity of the Australian economy to sustain rising real living standards without incurring chronic balance of payments problems. This prompted successive governments to introduce a range of reforms intended to enhance the competitiveness of Australian industries in international markets. These reforms, which included reductions in tariffs, the floating of the Australian dollar, and the abolition of most foreign exchange controls, increased Australia’s openness to foreign competition.
Faced with a much more competitive environment, changes to labour market institutions were inevitable. The result of this process is industrial relations arrangements that give primacy to bargaining at the enterprise and workplace level rather than to centrally-determined pay and working arrangements.
Workplace relations reform
Since the 1990s, significant changes have been introduced to Australia’s workplace relations laws. Current legislative reform seeks to maintain a strong safety net for employees while at the same time providing greater flexibility and choice for employers and employees at the workplace level.
In March 2008, the Australian Government introduced transitional measures to phase out key provisions in the existing workplace relations laws (the Workplace Relations Act 1996, the Workplace Relations Amendment (Work Choices) Act 2005 and the Workplace Relations Amendment (A Stronger Safety Net) Act 2007). Notable among these reforms is the phasing out of Australian Workplace Agreements (AWAs). The changes contained in the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 reflect undertakings made by the Government in its policy statements: Forward with Fairness; and Forward with Fairness Implementation Policy Plan.
The Transition to Forward with Fairness Act contains key provisions which:
- prevent the making of new Australian Workplace Agreements (AWAs) allow employers using AWAs as at 1 December 2007 to offer Individual Transitional Employment Agreements (ITEAs) to new employees and employers already on AWAs, for a two year transitional period
- introduces a ‘no-disadvantage test’ for new collective agreements and ITEAs
A new workplace relations bill will be introduced into parliament later this year to ensure the Government’s proposed new workplace relations system will be fully operational by 1 January 2010.
National workplace relations system
The Australian Government can only make laws about matters that are listed in the Constitution. Otherwise, the power to make laws rests with the states of Australia.
In 2006, the Australian Government established a national workplace relations system, based primarily on the corporations power of the Constitution. The corporations power permits the Australian Government to make laws about foreign corporations, and trading and financial corporations formed within Australia. This system currently includes all employees in incorporated businesses.
State and territory governments continue to regulate in areas such as occupational health and safety, worker’s compensation, trading hours, payment for work on public holidays and long service leave. Where there is any inconsistency between federal and state legislation, federal legislation will prevail.
The Australian Government is working with state and territory governments to deliver a uniform national workplace relations system that will include all private sector employees, including those employed by unincorporated businesses. It is also seeking to harmonise occupational health and safety legislation by 2012.
Main features of the current national workplace relations system
Until new legislation is introduced, the workplace relations system will continue to include the features outlined below.
Australian Fair Pay and Conditions Standard
The Australian Fair Pay and Conditions Standard sets out the statutory minimum terms and conditions of employment that apply under the federal workplace relations system.
The guaranteed legislated minimum entitlements are:
- minimum rates of pay and casual loadings.
- maximum ordinary hours of 38 hours per week (plus reasonable additional hours)
- four weeks of paid annual leave (with an additional week for shift workers)
- ten days of paid personal/carer’s leave (with provision for two additional days of unpaid carer’s leave and two additional days of paid compassionate leave per occasion)
- 52 weeks of unpaid parental leave (which may be taken as maternity, paternity or adoption leave)
Minimum wages
Minimum wages for employees are set out in Australian Pay and Classification Scales (Pay Scales), which are part of the Australian Fair Pay and Conditions Standard.
Employees are guaranteed the basic rate of pay for their classification as specified in the applicable Pay Scale. Employees not covered by a Pay Scale are guaranteed the Federal Minimum Wage (except for a junior, trainee or employee with disability, as defined in the Workplace Relations Act).
The Australian Fair Pay Commission sets and adjusts the Federal Minimum Wage and minimum and classification wages in Pay Scales.
The Australian Fair Pay Commission also has responsibility for Special Federal Minimum Wages for juniors, trainees, apprentices, and employees with a disability, and the wage loading for casual workers.
After 2010 a new independent umpire, Fair Work Australia, will be responsible for adjusting minimum wages.
Awards and award modernisation
Awards are legally binding instruments that set out minimum terms and conditions of employment for employees in specified businesses, occupations or industries.
Awards are made by a national tribunal, the Australian Industrial Relations Commission. They typically deal with matters such as hours of work, public holidays, monetary allowances, shift work or overtime loadings, annual leave loadings and penalty rates.
Part 10A of the Workplace Relations Amendment Act 2008 sets out a process for award provisions to be modernised and made simpler and more flexible and specifies certain requirements for modern awards. The award modernisation process is expected to be complete by 2010.
Together with a system of National Employment Standards, modern awards will guarantee the safety net protections for employees when the proposed new workplace system comes into effect in 2010. Setting, adjusting and reviewing awards will then become the responsibility of Fair Work Australia.
Workplace agreements
The Transition to Forward with Fairness Act prevents the making of new AWAs; however, AWAs made prior to the implementation date of the March 2008 legislation will remain in force until terminated or replaced.
To provide transitional arrangements for employers who currently use AWAs, the legislation allows for Individual Transitional Employment Agreements (ITEAs). ITEAs have a nominal expiry date of no later than 31 December 2009.
On and from 1 January 2010, a system of statutory National Employment Standards and modern simple and flexible awards will be in operation to protect employees and there will be no individual statutory employment agreements in any form.
ITEAs must not disadvantage an employee against an applicable collective agreement, or where there is no collective agreement, an applicable award and the Australian Fair Pay and Conditions Standard. This is known as the ‘no disadvantage test’ introduced in March 2008.
Similarly, collective agreements must not disadvantage employees in comparison with an applicable award and the Australian Fair Pay and Conditions Standard.
Both collective and individual transitional employment agreements commence when they are lodged with the Workplace Authority. After 2010 responsibility for reviewing and approving agreements will pass to Fair Work Australia. Workplace agreements can only deal with matters that are about the relationship between the employer and the employee.
It is unlawful to apply duress or coercion in relation to workplace agreements (for example, by attempting to force an existing employee to sign an agreement).
Freedom of association
The Workplace Relations Act recognises a legitimate role for unions and employer organisations. Freedom of association laws ensure that an employer cannot dismiss an employee because he or she is, or is not, a member of a union. All employees have access to remedies for breaches of freedom of association provisions. The right to take lawful industrial action when negotiating a new workplace agreement is also protected by law.
Right of entry
The Workplace Relations Act also defines the circumstances in which union officials have a right of entry into workplaces and empowers the Australian Industrial Relations Commission to deal with abuses of the right of entry system.
Industrial action
In certain circumstances an employee or an employer may engage in protected industrial action. Employees or unions cannot be held liable for protected industrial action (unless it involves defamation, personal injury, damage to property or the unlawful use of property). For industrial action to be protected a number of statutory criteria must be met, including that the industrial action taken is in pursuit of claims sought as part of the negotiation of a collective agreement and a secret ballot has authorised the taking of the action.
The Workplace Relations Act also provides that payments are not to be made to an employee or accepted by an employee in relation to a period of industrial action.
Subject to limited exceptions, the Trade Practices Act 1974 prohibits and penalises secondary boycotts, including union boycotts, aimed at causing substantial loss or damage. A secondary boycott occurs when industrial action is directed against a third party in order to prevent the third party dealing with the primary target of the industrial action.
Finally, the Workplace Relations Act contains safeguards to protect against disputes between unions (demarcation disputes) that might impede business operations.
Unfair dismissal and unlawful termination
The Workplace Relations Act contains provisions protecting employees from losing their job unfairly (unfair dismissal) or because of a prohibited reason (unlawful termination).
The unfair dismissal provisions provide employees with protection from harsh, unjust or unreasonable dismissal. However, the following types of employees are excluded from the unfair dismissal protections:
- employees employed by businesses with 100 or fewer employees
- employees who are dismissed for genuine operational reasons
- seasonal workers.
- employees engaged for a specified period of time or to perform a particular task
- employees serving a six month qualifying period
- employees on probation
- casual workers engaged for a short period
- trainees
- employees who are not employed under an award or workplace agreement and earn more than $101 300 a year.
The unlawful termination provisions apply to all employees regardless of the size of their employer’s business. The unlawful termination provisions provide protection from termination on grounds such as trade union membership, family responsibilities, pregnancy, marital status, temporary absence from work due to illness and for discriminatory reasons such as gender, age and race or nationality.
Compliance
The Workplace Ombudsman undertakes compliance and enforcement activities for the national workplace relations system, including assisting employees with suspected breaches of the Australian Fair Pay and Conditions Standard and the provisions of awards and workplace agreements. After 2010 the Workplace Ombudsman will be subsumed by Fair Work Australia.
A new workplace relations system
The Australian Government began to develop a new workplace relations system with the introduction of its transitional reform measures in March 2008. These measures initiated the award modernisation process and removed the power to make new AWAs.
The Government is drafting new legislation which is expected to be introduced into parliament in late 2008, enabling the commencement of a simpler, fairer and more flexible workplace relations system by the start of 2010.
The key elements of the Government’s new workplace relations system will be:
- collective enterprise bargaining, with no provision for statutory individual agreements
- a safety net of legislated minimum employment standards and modern awards
- the right to freedom of association and genuine workplace representation
- grievance and dispute settlement procedures and freedom from discrimination
- a new independent umpire – Fair Work Australia
- balanced laws which provide protection from unfair dismissal in a way which addresses the particular circumstances and concerns of small business
- a uniform national workplace relations system for the private sector
The new workplace relations system will encourage employers and employees to adopt flexible and modern workplace arrangements which enable workplaces to be productive and competitive, leading to greater employment opportunities and strong and sustainable economic growth.
Further Information
- The national workplace relations system
- The Australian Fair Pay and Conditions Standard and workplace agreements: contact the Workplace Authority
- Enforcement of or compliance with the workplace relations laws: contact the Workplace Ombudsman
State workplace relations systems:
- New South Wales Office of Industrial Relations
- Safework SA (South Australia)
- Queensland Department of Employment and Industrial Relations
- Western Australia Government
- Business Victoria – Industrial Relations
- Workplace Standards Tasmania
This fact sheet is also available to download ( PDF)
Last updated August 2008