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a Fairness Test must now be applied to all relevant collective agreements and AWAs (“workplace agreements”); and
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an Workplace Relations Fact Sheet must be provided to all employees regarding their employee entitlements
The Fairness Test – what has it changed?
Before Work Choices amended the Workplace Relations Act 1996 (“WRA”) in March 2006, employers seeking to make workplace agreements had to:
- ensure that the agreements passed a No Disadvantage Test against any relevant award before the agreements could operate. Employers effectively had to “buy out” any applicable award conditions that they sought to remove in an agreement, by paying another, above-award benefit; and
- have the agreements approved by an independent body such as the Australian Industrial Relations Commission (for collective agreements) and the Office of Employment Advocate (for AWAs).
After the Work Choices amendments in March 2006, workplace agreements could be substantially simpler than before, and could – and often did – remove award conditions without providing any form of compensation to the employees for doing so.
The Fairness Test
Under the Safety Net Act of June 2007, the Workplace Authority Director (“WA”) (the new name for the OEA) must now conduct a “Fairness Test” on all relevant workplace agreements lodged after 7 May 2007 where:
- an employee would be entitled, but for the agreement, to a protected award condition
- the agreement seeks to exclude or modify a protected award condition
- (for AWAs) the employee is earning a gross salary of less than $75,000.
If a workplace agreement is found not to provide “fair compensation” in lieu of a protected award condition it will fail the Fairness Test and will cease to operate.
The employee will also be entitled to compensation for the loss of the relevant award condition from the date the agreement was lodged.
To ensure the effective operation of the Fairness Test, the Safety Net also provides for penalties up to $33,000.
