The Federal Government’s transitional IR laws, which end the making of new AWAs, came into affect on Friday, 28 March 2008.

Out with the old…

• AWAs are no longer an option for businesses
  
  
• AWAs signed before 28 March 2008, but not lodged, can be lodged by employers until 9 April. AWAs lodged after this date will not come into operation.
  
  
• AWAs that have already been made will continue until their nominal expiry date whereby they may be terminated by either party with 90 days’ notice.

In with the new…

• Employers who used AWAs on 1 December 2007 will be able to use ITEAs for new employees, former employees or existing employees who were employed on AWAs.
  
  
• In the case of new employees, ITEAs will take effect from the date they are lodged with the Workplace Authority
  
  
• In the case of existing employees, ITEAs will commence operation once they have passed the no disadvantage test.
  
  
• ITEAs will have a nominal expiry date of 31 December 2009 unless an earlier date is specified.
  
  
• An ITEA may be made before the commencement of employment; or, where the employee has commenced employment, the ITEA must be made within 14 days of commencement.
  

The new no-disadvantage test

• The fairness test will be scrapped for all ITEAs and replaced with a new no-disadvantage test.
  
  
• An ITEA will pass the no-disadvantage test if it does not result, on balance, in a reduction in the employee’s overall terms and conditions of employment under the Australian Fair Pay and Conditions Standard (“AFPCS”), any long service leave entitlements in relevant State or Territory laws and:
  
  (i) a relevant collective agreement; or
  (ii) a relevant award (or NAPSA); or
  (iii) designated award.
  
  
• If an ITEA does not pass the no-disadvantage test, the Workplace Authority will notify the parties, and provide advice as to how the agreement may be varied so it will pass the no-disadvantage test. Employers may then lodge a variation of the ITEA with the Workplace Authority, who will again apply the no-disadvantage test to the ITEA as varied.
  
  
• In the case of new employees, where the ITEA has commenced upon lodgement, if their ITEAs fail the no-disadvantage test, the Workplace Authority will also provide notice of this and employers may lodge variations of the ITEAs. A failure to lodge a variation will cause the ITEA to cease operation. Employees in these circumstances will be entitled to compensation for any period where the ITEA did not pass the no-disadvantage test.
  
  
• If an ITEA ceases to operate because it has failed to pass the no-disadvantage test, the employer and employee will be bound by the agreement, award or designated award that would have bound them but for the ITEA.

 

Should you require further information in relation to this article, please contact Louise Houlihan, Partner, on 9608 2273 or l.houlihan@cornwalls.com.au