Alternative Law Journal
In 1999, the federal government introduced the second wave of industrial relations reforms in the Workplace Relations Amendment (More Jobs, Better Pay) Bill 1999 (Cth). While the Bill was defeated in the Senate, its content has reappeared in a series of smaller Bills amending the Workplace Relations Act 1996 (Cth) (WRA). The Bill dealing with Australian Workplace Agreements (AWAs) is the Workplace Relations Amendment (Australian Workplace Agreement Procedures) Bill 2000 (Cth) which is currently before the Senate.* According to the federal government:
the broad objective of the amendments, which are largely technical, is to create an environment where AWAs become more widely accessible, easier to make, and have the scope for greater flexibility to encourage working arrangements that better suit the needs of the business and its employees.
Evidence from the Office of the Employment Advocate, which is responsible for the administration of the AWA process, suggests that the approval process for AWAs represents a disincentive to the establishment of these agreements. The current approval process is lengthy, and academic commentators have suggested that improvement could be made. It is not disputed that scope exists for simplification but it cannot come at the expense of employee protection. While the government may refer to the changes as ‘largely technical’, a number of the proposed changes are potentially more invidious than the word technical would suggest. This article explores those proposed amendments that are of the most concern from the perspective of employee protection.
The Bill seeks to simplify the process of filing and approving an AWA. The proposed changes are as follows:
• An AWA will commence operation from the date that the parties to the AWA sign the AWA (cl.170VBD).
• An AWA will cease operation if no application is made to the Employment Advocate within 60 days of the commencement of the AWA or when a refusal notice is issued (cl.170VBD).
• An employee may withdraw consent to an AWA within a cooling off period after the commencement of the AWA if the employee’s rate of remuneration is not more than $68,000 a year. The cooling off period is five days after the date of signing for a new employee and 14 days after the date of signing for an existing employee (cl.170VBA(6) and (7)).
• Instead of a separate filing and approval process, there is a one-step approval process (cl.170VCB).
The proposed amendments will simplify the procedure for approving an AWA. Under the present legislation the provisions require an employee to be given a copy of the AWA five days or 14 days before signing (s.170VPA(1) WRA). These will be replaced with a cooling off period after signing. This change is in response to the fact that a large proportion of AWAs were being rejected by the Employment Advocate on the grounds that the employee had not waited the requisite number of days before signing. However, reversing the position to a cooling off period will shift the onus to the employee to back out of the agreement should they subsequently change their minds or receive advice suggesting that the AWA does not represent their best interests. As pointed out by the Community and Public Sector Union, ‘employees will always be put in a more difficult position if they have to withdraw from an agreement they have previously accepted’.
The second notable alteration is that AWAs will commence operation immediately after signing and do not have to be submitted to the Employment Advocate for approval for 60 days. This alters the existing provisions that provide an AWA will commence upon filing or approval by the Employment Advocate and that agreements have to be filed within 21 days of signing (s.170VN(3) WRA). The effect of the new provisions is that the terms and conditions of an AWA will come into effect on the date of signing, before approval of the AWA has been granted, and can continue for as long as 60 days without being approved by the Employment Advocate. This change to the Act is designed to allow employment to commence on the new terms and conditions immediately, without having to wait for the approval process to be completed. While this may be considered an advantage, the onus is then placed on the employee to seek to recover any lost entitlements should the AWA be refused or not submitted for approval.
The current approval process for AWAs does require simplification. The merging of the filing process and the approval process appears to be a step in the right direction. However, some of the changes that are proposed in pursuit of simplicity and flexibility appear to place a heavy onus on the individual employee to ‘opt out’ of an agreement that they have signed too hastily and to recover lost entitlements in the event that an AWA is not approved. It seems that the balance here between efficiency and employee protection is more heavily weighted on the side of efficiency.
The Bill also proposes to remove the referral of AWAs to the Australian Industrial Relations Commission (AIRC) where the Employment Advocate has concerns over whether or not the AWA passes the no-disadvantage test. This test requires that an employee not be disadvantaged in the terms and conditions of their employment under the AWA. The changes propose that the whole approval process will be carried out by the Employment Advocate in the following manner (cll.170VCB and 170VCC). First the Advocate must establish that the AWA satisfies the requirements for creation and content of the AWA and then, whether or not the agreement passes the no-disadvantage test. If the Employment Advocate has concerns about whether or not the agreement passes the no-disadvantage test, the Employment Advocate must give the parties to the AWA an opportunity to take any action, give any undertakings or supply any information in order to resolve those concerns. The Employment Advocate must approve the AWA if the concerns are resolved. If the concerns of the Employment Advocate are not resolved, instead of referring the AWA to the AIRC, the legislation provides for the Employment Advocate to apply a public interest test. The Employment Advocate must approve the AWA if the Employment Advocate is not satisfied that the AWA passes the no-disadvantage test but is satisfied that it is not contrary to the public interest to approve the AWA. While referrals to the AIRC are removed, the Bill does provide for the President of the AIRC to establish principles to provide general guidance to the Employment Advocate concerning the application of the public interest test.
According to the Department of Workplace Relations and Small Business the removal of referrals to the AIRC will remove an unnecessary layer in the approvals process and avoid the duplication of effort and paperwork between the Office of the Employment Advocate and the AIRC. However, employee organisations have expressed concern that the proposed provisions will result in a system where AWAs are not subject to proper scrutiny and where there will be no impetus to ensure that the interests of workers are afforded proper protection. The concerns of employee groups are understandable. The proceedings of the Employment Advocate are not conducted in public and the Employment Advocate, a public servant, does not represent an independent body akin to the AIRC. While the parties to an AWA agreement cannot be identified, the AIRC conducts public hearings and its decisions represent a part of the public record. The Bill proposes to remove an avenue of public scrutiny of the AWA process. The decision to remove referrals to the AIRC is a measure that is weighted in favour of efficiency and that will promote secrecy rather than employee protection.
Under the current provisions, when an AWA is filed the employer must make a declaration stating whether or not the employer has offered an AWA in the same terms to all comparable employees within the workplace. If the employer has failed to offer an AWA in the same terms to all comparable employees, when determining whether or not to approve the AWA the Employment Advocate must consider whether or not the employer has acted unfairly or unreasonably in failing to do so (s.170VPA(1) WRA). Therefore, the Act does not require an AWA to be offered to all comparable employees on the same terms, but it does require an employer to be able to justify a decision not to do so. The Bill repeals these provisions.
The rationale provided by the federal government for the repeal of these provisions is interesting. The government argues that the provision creates confusion because ‘many employers are unaware that individual performance may be taken into account in determining what conditions may be offered.’ The government also argues that the provision discourages the use of AWAs to tailor individual working arrangements to particular circumstances. In effect, the government is suggesting that employers may become confused by the provisions and believe that they must offer comparable employees comparable AWAs regardless of the circumstances. This appears to be an extremely tenuous argument to the effect that a legislative provision that supports the principle of equal pay for work of equal value should be discarded because some employers may have become confused by it. The current provisions merely require an employer to provide a justification when comparable AWAs are not offered to comparable employees and as such there is no reason to repeal them. The removal of the provisions would, in effect, open the door for the erosion of the principle of equal pay for work of equal value.
Under the current regime a certified agreement prevails over an AWA to the extent of any inconsistency, provided that the certified agreement is in operation, has not passed its nominal expiry date and does not contain a provision allowing for a subsequent AWA to prevail over the certified agreement (s.170VR(6) WRA). However, the Bill reverses this position by providing that during its period of operation an AWA will operate to the exclusion of any certified agreement that would otherwise apply to the employee’s employment (cl.170VD(4)).
The government argues that the changes will allow parties to have greater choice with respect to the terms and conditions of employment that govern their employment relationship. However, there is provision under the existing legislation for AWAs to prevail over certified agreements through the insertion of a provision to that effect in the relevant certified agreement (s.170VQ(6) WRA). Therefore, the flexibility to enter into individual agreements that would prevail over certified agreements is present within the existing legislative framework. However, the current legislation does require an employer to come to an agreement with the other party (employee group or trade union) to the certified agreement over the presence of such a clause. The Bill would make this step unnecessary. This change reflects the policy of the federal government to move away from a system of collective bargaining and towards a system of individual negotiation where a ‘more direct relationship’ between employers and employees is recognised, free from the unwanted intervention of ‘third parties’.
Employee organisations have expressed concern over the push to promote individual negotiation over collective bargaining. The Australian Council of Trade Unions consider that these amendments would ‘result in the total destruction of collective bargaining and collective representation’. The ACTU points out that under the proposed changes there would be nothing to stop an employer negotiating an enterprise agreement on one day and then presenting his workers with an AWA the next day, effectively ousting the result of the collective bargaining process. In addition to these concerns expressed by the ACTU, the changes also raise disquiet over the level of Australian legislative compliance with international law. In 1999, the International Labour Organisation (ILO) was critical of the WRA because the Act ‘gives primacy to individual over collective relations through AWA procedures’. The proposed amendments will place Australia further in breach of the ILO Right to Organise and Collective Bargaining Convention of 1949 by enhancing the primacy of individual agreements over collective agreements.
Another interesting amendment proposed is a system of fast track approvals for employees whose remuneration exceeds $68,000. Employees in this position will be affected in two different respects. First, they will not have access to the cooling off period that will apply to other employees after they have signed an AWA (cl.170VBA(6)). This means that there is no legislative time frame provided before an AWA must be signed and there is no access to the cooling off period after the AWA has been signed. Secondly, the no-disadvantage test will not automatically apply to employees in this position. The Bill provides that where the rate of the employee’s remuneration is more than $68,000 a year, the parties may accompany the application for approval with a declaration stating that the remuneration is more than $68,000 a year. When this occurs, the AWA is automatically taken to have passed the no-disadvantage test (cl.170VCB(2)). However, there is also provision for the employee to accompany the declaration of income with a request that the Employment Advocate apply the no-disadvantage test, in which case the Advocate must apply the test (cll.170VC(4) and 170VCB(2)(b)).
The rationale provided for this change by the government is that approval for AWAs for those over the income threshold will be quicker and the costs of applying the no-disadvantage test will be avoided. It is also worth noting that the unfair dismissal provisions within the WRA have applied an income test for access since 1994. However, the income test that applies to the unfair dismissal regime is indexed to inflation. The AWA Bill applies no indexation. This means that unless appropriate changes to the Bill are made, the number of employees affected by the provisions will gradually increase. Furthermore, it should be noted that the AIRC has interpreted the word ‘remuneration’ in an expansive manner to include not only base pay but also superannuation, penalties and benefits that attract fringe benefits tax. Therefore, the actual take home pay of employees affected by these provisions may be considerably less than $68,000.
In response to these arguments it is necessary to point out that while employees in this position are excluded from access to the cooling off period they are not excluded from access to the no-disadvantage test. However, the legislative onus has been placed squarely on the employee to make a written request to the Employment Advocate requesting the application of the test. Again, these provisions shift the responsibility away from employers and onto employees. Furthermore, it is questionable whether it is appropriate to entrench an income divide with respect to access to statutory protection. These provisions will further create and enhance a ‘lower class’ of middle to high-income employees who experience less protection and bear a heavier onus to assert their rights.
The amendments proposed to the AWA provisions will almost certainly achieve the efficiency and simplicity that the federal government is seeking. However, these benefits will come at a price. The proposed amendments will place Australia further in breach of international conventions with respect to the promotion of collective bargaining. The changes will further entrench the unnecessary income divide within the legislation, depriving middle to high income earners of essential statutory protection. Finally, the alterations will place a heavy onus on individual employees to protect their own interests at all stages of the AWA process.
[*] Shae McCrystal teaches law at the Australian National University. ©2001 Shae McCrystal
 Department of Employment, Workplace Relations and Small Business submission to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee inquiry into the Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 (Cth), 28 August 2000, p.12. (Hereafter referred to as DEWRSB Senate Submission).
 Hamberger, Jonathan, Employment Advocate, Submission to the Senate Employment Workplace Relations, Small Business and Education Legislation Commission Inquiry into the Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 (Cth), 28 August 2000.
 Ron McCallum comments that ‘the decision of an employer to go down the AWA route will require much forethought and will warrant close attention to the detail of this process’. McCallum, Ronald, ‘Australian Workplace Agreements — An Analysis’, (1997) 10 Australian Journal of Labour Law 50–61, 51.
 CPSU (PSU Group) Submission to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee inquiry into the Workplace Relations Amendment (Australian Workplace Relations Procedures) Bill 2000 (Cth), August 2000, Attachment B.
 DEWRSB Senate Submission, p.51.
 Australian Council of Trade Unions (ACTU) Submission to the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee Inquiry into the Workplace Relations Amendment (Australian Workplace Agreements Procedures) Bill 2000 (Cth), August 2000.
 DEWRSB Senate Submission, p.52.
 DEWRSB Senate Submission, p.52.
 DEWRSB Senate Submission, p.52.
 DEWRSB Senate Submission, p.52.
 ACTU Senate Submission, p.5.
 ACTU Senate Submission, p.5.
 Report of the Committee of Experts on the Application of Conventions and Recommendations, Observation on the state of Australian Compliance with respect to the Right to Organise and Collective Bargaining Convention, 1949, International Labour Organisation, 1999. This convention was ratified by Australia in 1973.
 DEWRSB Senate Submission, p.52.
 For an example of the AIRC approach to the meaning of the word remuneration see Munro, J., MacBean, S.D.P. and Hoffman, C., J.C Bell and McArthur River Mining Pty Ltd, Australian Industrial Relations Commission, Print Q1629, 3 July 1998.