Federal awards and agreements

Contributed by Clare Ozich and current to 1 September 2005

AWARDS

Awards are a detailed set of entitlements and obligations which apply collectively to employees and employers in particular fields of work. Awards do not cover every aspect of employment; for example, local work rules or over award payments and entitlements may be covered by the employment contract.

At the Federal level, awards are made by the Australian Industrial Relations Commission in settlement of industrial disputes. The core of the Federal system is the concept of respondence to awards. Employers are bound by a Federal award only if they are a named party or a successor of a named party or if they belong to a recognised employer association which is named as a party to the award. All employees who work for an employer who is a respondent to an award are entitled to the benefits under that award.

Awards continue in force until they are replaced by a new award.

Under the Workplace Relations Act, awards have a much more limited scope than in the State system. In making awards, the Australian Industrial Relations Commission is limited to dealing with certain matters called allowable award matters. These include rates of pay, redundancy pay, public holidays and leave.

CERTIFIED AGREEMENTS

Certified agreements differ from awards because they are enterprise-specific, that is, they are made usually with one employer only. Certified agreements can be entered into by employees and their employer where the employer meets the definition of a constitutional corporation (that is, a corporation incorporated under the federal Corporations Law). They can also be made between unions and employers, or in settlement of an industrial dispute. The restrictions in respect of constitutional corporations reflect the power under the Constitution under which the provisions of the Workplace Relations Act are made.

Before certifying an agreement, the Australian Industrial Relations Commission must be satisfied that the agreement passes the no-disadvantage test, does not unreasonably exclude any employees, and does not discriminate against any group of employees. An agreement passes the no-disadvantage test if it does not disadvantage employees in relation to their terms and conditions of employment. An agreement disadvantages employees if it would result, on balance, in a reduction in the overall terms and conditions of employment under relevant existing awards or laws. A certified agreement may also be the outcome of the resolution of an industrial dispute.

In 2004 the High Court brought down an important decision in the Electrolux case. The High Court decided that an agreement cannot be certified if it contains a provision that does not pertain to the employment relationship. The consequences of this decision are still being determined at the time of writing (December 2004). The Electrolux case itself determined only that bargaining fees for unions were not matters which pertained to the employment relationship and it is yet to be seen what other types of provisions may be unable to be a part of certified agreements: Electrolux Home Products Pty Ltd v Australian Workers’ Union and Others [2004] HCA 40; (2004) 209 ALR 116.

Certified agreements may be entered into by unions and employers; by employees and employers without union involvement; and by parties to industrial disputes. There must be a vote of all workers to be covered by the certified agreement, even if the employees are not to be parties to it. The agreement must be approved by a genuine majority of the employees covered. Certified agreements operate for a period of three years only. Certified agreements can only be varied in certain circumstances, and in any case where a majority of employees agree to the change.

AUSTRALIAN WORKPLACE AGREEMENTS (AWAS)

Under the Workplace Relations Act, there are also provisions for the making of individual agreements, an Australian Workplace Agreement (AWA), under which the working conditions of employees may be agreed between individual workers and employers. AWAs may be entered into with constitutional corporations and can operate in the Commonwealth public service, but do not have effect in the state public service.

AWAs may be negotiated collectively, but must be signed by each worker individually. Unions are not necessarily involved in negotiating AWAs. If they are involved, it will be as a bargaining agent and they may only act for individual workers from whom they have written permission. AWAs must be filed with the Office of the Employment Advocate. A list of minimum conditions set out in the Act must be contained in each AWA. AWAs must also pass the no-disadvantage test (see above). AWAs commence operation when they are filed with the Office of the Employment Advocate, and they operate for a maximum period of three years. A court may set aside an AWA which is entered into as the result of duress or misleading statements by the employer. Variations to AWAs must also be filed with the Office of the Employment Advocate.

Employees who are covered by an AWA are not covered by any Federal or State award or agreement, and may not be covered by any Federal certified agreement, during the period of operation of the AWA.