Daily Archives: February 12, 2025

The AFPC standard

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The AFPC standard includes

• 10 days sick leave (this is able to be used as carer’s leave) in addition to two days paid compassionate leave and a further two unpaid personal leave days for emergencies.
• Four weeks annual leave (with an extra week for shift workers)
• 12 months unpaid parental leave
• A standard 38 hour week (this is able to be averaged over a year if the employer and employee agree), although reasonable additional hours may be required.
• The federal minimum wage as stated in the AFPC
“Protected” award conditions are
• Penalty rates
• Shift and overtime loadings
• Monetary allowances
• Annual leave loading
• Public holidays
• Rest breaks
• Incentive based payments.

The AFPC standard conditions are unable to be traded away at all however, the protected award conditions are able to be traded away for fair compensation, subject to the agreement passing the fairness test.

Awards

One of the priorities of Workchoices is to reduce the relevance of awards and as an alternative, get employees onto agreements. A taskforce has also been established to simplify and rationalise awards. The Government has not yet asked the Australian Industrial Relations Commission (AIRC) to begin this process.

Minimum Wages

Traditionally, the AIRC had the minimum wage setting function. The Government in its Workchoices IR reforms, took this function from the AIRC. It was given to the newly created Australian Fair Pay Commission (AFPC). The AFPC decides the minimum wage based on submissions and consultation, rather than a formal hearing. It also determines the timing, scope and frequency of wage reviews.

Additionally, when determining wages, the AFPC must take into account the capacity of the unemployed and low paid to get and retain jobs. A safety net may be provided for the low paid. The Government also removed fairness from the wage setting objectives.

Australian Workplace Agreements.

An Australian Workplace Agreement (AWA) is an individual written agreement, made between an employer and an employee under the Workplace Relations Act 1996 (Cth). This is opposed to a collective agreement, either union negotiated or non union negotiated. The AWA sets out the terms and conditions of employment. They must guarantee basic rates of pay and guaranteed casual loadings, hours of work, annual leave, personal leave and unpaid parental leave, as provided for in the Australian Fair Pay and Conditions Standard. Once an AWA commences operation, it replaces any award or workplace agreement which would otherwise apply to the employee.

An AWA overrides employment conditions in state or territory laws, if the agreement refers to those conditions. However, an AWA cannot override any state or territory laws which cover occupational health and safety, workers’ compensation or training arrangements. It must also meet the Australian Fair Pay and Conditions Standard.
The reasoning behind having an AWA is that they are intended to provide flexibility in the setting of payment and employment conditions, suited to both parties’ preferences. An existing employee cannot be forced to sign an AWA. Whether this occurs or not is yet to be seen.

In March 2007, according to a newspaper report in the Australian newspaper, approximately 5 per cent of the total workforce is employed on AWA’s.
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This is the Government’s preferred employment agreement, rather than other forms of agreement making such as collective agreements. They believe that Workchoices, in cutting the safety net of pay to the AFPC standard, provides employers with a major financial incentive for employers to introduce its statutory individual contracts – in addition to non union arrangements. A fairness test was introduced on 7 May, which reinstated certain protections for employees.

The test provided that there were certain established conditions which could not be traded at any cost and there were other ‘protected’ conditions which could be traded for compensation (usually a higher rate of pay) but is subject to the fairness test. If the agreement fails the fairness test, it needs to be altered. AWA’s have proved to be highly controversial due to concern about conditions and the fact that since the implementation of Workchoices, unions have been severely restricted from getting onto workplaces with AWA’s in place.

The Government’s Industrial Relations System

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What is the Government’s industrial relations system? Workchoices came into effect in early 2006 as a sweeping reform. The coalition maintains that Workchoices is the best system for Australia. They believe it has provided employees with greater flexibility to achieve a proper work/life balance. Below is a brief summary of what the Governments industrial relations policy and legislation includes.

National System

The Government relied on the Constitution’s corporations power in an attempt to implement a national industrial relations system. However, some State Government employees plus employees of unincorporated organizations do not fall within this power and are not affected by Workchoices. The Commonwealth Government still has five states which have not signed over their state industrial relations powers to operate alongside the federal system. So far Victoria is the only state to do so.

No Disadvantage Test

The Fairness test which has been implemented under Workchoices is effectively a ‘no disadvantage test.’ However, the fairness test differs slightly as it takes into account both monetary and non monetary compensation, provides for ‘fair’ rather than ‘full’ compensation, allows the Workplace Authority to consider an employees personal circumstances and it does not apply to AWA’s where the person who is a party to that AWA is earning over $75 000. Agreements begin to operate from the date they are lodged with Workplace Authority. However, most are subject to the
fairness test and if the agreement fails the test, then the employer is obligated to provide back pay to the employee to compensate for the money not paid. The Fairness Test has largely neutralized Workchoices. In fact, in terms of its practical application, it could almost be said that the Prime Minister withdrew Workchoices when he introduced the Fairness Test in May 2007. The usual supporters of the Government such as the National Farmers Federation were not consulted, and have been forlornly lobbying
ever since to have the test withdrawn.

Unfair Dismissal

This now becomes the principle point of difference between the alternative Governments. The Labor Party will restrict the jurisdiction only by ballooning the probation period out to twelve months for small business. The Coalition attitude remains. In workplaces which have fewer than 100 employees, employees will have no entitlement to make unfair dismissal claims. Where workplaces have more than 100 employees, they are only exempt from unfair dismissal if they can demonstrate that the dismissal was for a reason including operational reasons. Both maintain the same stance on Unlawful termination (see below). But, details on Agreement Making Under the Liberals:
Minimum Conditions Under Workchoices, employees are entitled to various statutory conditions. This is the Australian Fair Pay and Conditions (AFPC) standard in addition to other nominated ‘protected’ award conditions.