PAUL RONFELDT
PARTNER

THE FAIRNESS TEST

ANTHONY MASSARO
SENIOR ASSOCIATE

In response to increasing levels of public focus on Industrial Relations, the Federal Government has announced a further amendment to the Workplace Relations Act 1996, effective 7th May 2007.

All Australian Workplace Agreements covering employees earning less than $75,000, and all collective agreements lodged on or after 7 May 2007 must satisfy a new Fairness Test.  In effect, this test requires the employer to ensure that employees are adequately compensated in the event that their employment agreement excludes certain Award conditions.  Those conditions are:

• penalty rates, including weekend and public holiday rates;

• shift and overtime loadings;

• monetary allowances;

• annual leave loading;

• public holidays;

• rest breaks; and

• incentive-based payments and bonuses.

Agreements will continue to take effect from the date of lodgement with the Office of the Employment Advocate (to be renamed the Workplace Authority), but in the event that an agreement is rejected, back pay may be required to compensate the employee.  Agreements can also be sent to the Workplace Authority pre-lodgement for assessment.  As yet, there are no guidelines or policies as to how the Workplace Authority will approach the fairness test, and there is no indication as to how long it might take the Workplace Authority to assess each agreement.

If you are in the process of finalising or lodging a workplace agreement under Workchoices, it is important that you review the document to ensure that it complies with the new fairness test.  Similarly, if you have an existing AWA template and you propose to use it to engage a new employee, we strongly recommend that you review the template to ensure compliance.

If you are uncertain as to how this new test might affect you, please contact:

Anthony Massaro - Phone +61 3 9609 1501 or email amassaro@rk.com.au
Paul Ronfeldt - Phone +61 3 9609 1541 or email pronfeldt@rk.com.au