From 1 January 2010, the Queensland Government referred its workplace relations powers in respect of private sector employers (including sole traders and partnerships) to the Federal Government.
As a result the majority of employers and employees are now covered by the National Workplace Relations system.
An organisation which employs staff has legal obligations towards its employees. Management committees of community-based organisations are responsible for providing their organisation's employees with clear terms and conditions of employment. The organisation has to demonstrate that it is acting in accordance with Federal and Queensland legislation. It is not possible to list every aspect of these legal obligations, but the following points may assist recognising some of these legal accountability requirements.
The Act brought about significant changes to the minimum entitlements and conditions of employment and how these conditions are regulated. .
National Employment Standards
The NES, set out in the Act, outline ten minimum workplace entitlements and conditions. The NES applies to all employees covered by the national workplace relations system (however, only certain NES entitlements apply to casual employees) regardless of any applicable modern award, agreement or contract of employment that may apply. The NES includes:
- A maximum standard working week of 38 hours for full-time employees, plus ‘reasonable’ additional hours.
- A right to request flexible working arrangements to care for a child under school age, or a child (under 18) with a disability.
- Parental and adoption leave of 12 months (unpaid), with a right to request an additional 12 months.
- Four weeks paid annual leave each year (pro rata for part time employees).
- Ten days paid personal/carer’s leave each year (pro rata for part time employees), two days paid compassionate leave for each permissible occasion, and two days unpaid carer’s leave for each permissible occasion.
- Community service leave for jury service or activities dealing with certain emergencies or natural disasters. This leave is unpaid except for jury service.
- Long service leave.
- Public holidays and the entitlement to be paid for ordinary hours on those days.
- Notice of termination and redundancy pay.
- The right for new employees to receive the Fair Work Information Statement.
The NES applies to all National system employees and can not be reduced or eroded by an enterprise agreement, modern award or contract of employment. When entering into an employment relationship, an employer cannot provide an employee with an agreement where the entitlements are less than the NES. The NES is considered a guaranteed minimum standard for an employee.
Your employees may also be covered by a modern award in addition to the NES. A modern award covers an industry or occupation and provides additional minimum terms and conditions of employment that you as the employer must comply with.
Modern awards contain terms regulating minimum wages, penalty rates, types of employment relationships, flexible working arrangements, ordinary hours of work, rest breaks, employment classifications, allowances, leave and leave loading and superannuation requirements. A modern award may also include requirements for workplace consultation, representation, dispute settlements and any relevant industry specific redundancy entitlements.
A modern award will not apply to an employee at a time when the employee is considered a high income employee. A high income employee is an employee with a guarantee of annual earnings that is greater than the prescribed high income threshold. As of 1 July 2011, the high income threshold was at $118,100 per annum. This amount is indexed annually.
The NES continues to apply to all high income employees.
Amounts that may be included in determining an employee’s guaranteed annual earnings include:
- employee’s wages;
- amounts that are dealt with at the direction of the employee (for example salary sacrifice); and
- agreed money value for non-monetary benefits (for example car parking, motor vehicle, mobile phones).
Amounts that are excluded from an employee’s guaranteed annual earnings are:
- payments the value of which can not be determined in advance (for example, commissions and bonuses)
- compulsory employer superannuation contributions;
Entering into an Agreement
In addition to the contract of employment, there are two different agreements which an employer may negotiate with their employees to regulate wages and conditions. They are Individual Flexibility Agreements (IFAs) and Enterprise Agreements.
Section 144 of the Act allows an employer to enter into an IFA with an employee to vary the effect of certain terms and conditions of a modern award to better meet the individual needs of both the employer and individual employee.
Each modern award will stipulate the terms and conditions of that modern award that an employer and an employee are entitled to vary. Generally, these terms and conditions will include those concerning:
- arrangements for when work is performed (ie. working hours);
- overtime rates;
- penalty rates;
- allowances; and
- leave loading.
To be valid an IFA must pass the “better off overall test’ (BOOT). To pass the BOOT, an IFA must place an employee in a position that is better off overall than the position the employee would have been in under their relevant modern award conditions. The BOOT assessment is not limited to determining whether or not the employee is better off financially. Other non-financial factors such as an employee’s personal circumstances, workplace flexibility and additional time off may also be considered.
Either party may request the other enter into or negotiate an IFA. However, in order for an IFA to be valid, both parties must genuinely agree to its terms. An employer cannot ask a prospective employee to agree to an IFA as a term or condition of their employment.
In order to be valid an IFA must:
- be in writing and name the parties to the agreement;
- be executed by both parties (if the employee is under 18 years of age, the IFA must also be signed by the employee’s parent or guardian);
- state the specific terms of the applicable modern award that the parties have agreed to vary;
- detail how the terms are varied;
- state the date the IFA will commence to operate; and
- detail how the agreement results in the employee being “better off overall”.
An IFA may be terminated by agreement, the creation of a new Enterprise Agreement or by either party giving the required notice provided for under the relevant modern award. For the majority of modern awards, this period is 28 days.
In order to be valid and enforceable an IFA must meet all requirements set out above. If an IFA does not meet the above requirements, it will not only be unenforceable but you may also be required to back pay employees for unpaid entitlements and face significant penalties should you be prosecuted.
Fair Work Australia does not formally approve or review an IFA.
As an alternative, an employee or employer may choose to negotiate an Enterprise Agreement. An Enterprise Agreement is an agreement made by an employer with a group of employees, or by more than one employer with groups of employees. An Enterprise Agreement may also be made by one or more employers and one or more unions where the agreement is for a genuine new enterprise.
There are three types of Enterprise Agreements:
- ‘Single-Enterprise Agreements’ made between a single employer, or one or more employers co-operating in a single interest (for example, parties to a joint venture), and their employees;
- ‘Multi-Enterprise Agreements’ made between two or more employers, that are not single interest employers, and their employees; and
- ‘Greenfields agreements’ one or more employers and one or more unions where the agreement is for a genuine new enterprise where no employees have yet been engaged. A Greenfield Agreement may be either a Single-Enterprise Agreement or a Multi-Enterprise Agreement. A Greenfields Agreements can only be made with a union.
An Enterprise Agreement may include terms about one or more of the following matters:
- matters pertaining to the relationship between the employer and employee (this can include wages, dispute resolution, flexibility arrangements etc);
- matters pertaining to the relationship between the employer or employee and the employee organisations that will be covered by the agreement;
- deductions authorised to made from wages; and
- how the agreement will operate.
Parties engaged in the negotiation of an Enterprise Agreement must do so in good faith. In order to negotiate in good faith a bargaining representative must:
- recognise and bargain with the other bargaining representatives for the agreement.
- attend and participate in meeting at reasonable times;
- disclose relevant information (other than confidential or commercially sensitive information) in a timely manner;
- respond to proposals made by other bargain gin representatives in a timely manner; amd
- give genuine consideration to the proposals made by other bargaining representatives, and give reasons for their response to those proposals.
Once a draft agreement has been formulated, an employer may submit the draft agreement to their employees for voting.
In order to conduct a valid vote an employer must:
- nominate a voting day, which must be at least 21 days after the employees were notified of their right to appoint a bargaining representative;
- at least seven days prior to the nominated voting day, provide each employee with a copy of, or ready access to, the draft agreement;
- at least seven days prior to the nominated voting day, notify the employees of the time, place and method by which the vote will take place; and
- explain the terms and conditions of the proposed agreement to the employees.
The agreement will be considered to be passed if a majority of the employees of the employer, or each employer, who cast a valid vote endorse the agreement.
Once an agreement is approved by the employees, the bargaining representatives for the agreement must lodge it with Fair Work Australia for approval. This lodgement must occur within 14 days of the agreement being passed by the employees.
Fair Work Australia will review the agreement to ensure it is fair, only includes permitted matters (as identified above), passes the BOOT and provides for consultation, dispute resolution and flexibility. The agreement will take effect seven days after its approval by Fair Work Australia or at a later date specified in the agreement.
You should seek legal advice on the terms and conditions of your proposed agreement before submitting it to for vote to ensure you have met your legal obligations.
Whether or not employment is covered by the NES, a modern award, or an enterprise agreement, written employment contracts are still good employment practice. Verbal agreements and letters of appointment are usually not comprehensive enough. It is recommended that prior to attempting to develop your own contracts, you should become familiar with the legal issues involved, and consider carefully the importance of offering stable, secure employment to each of your employees.
Employment contracts set out the expectations, rights and obligations of both the employer and employee, and must comply with the requirements of all State and Federal legislation as well as the terms of any relevant modern award or enterprise agreement that applies. Contracts may cover many of the same provisions as a modern award as well as including references to say, work use of private vehicles and telephones.
Employment contracts are negotiated between the employer and each worker at the time employment is offered. Each worker should be given the opportunity to negotiate for changes to the contract. Unless otherwise specified in a contract, hours of work, wages and conditions can be renegotiated at any time, and a new contract prepared.
Employment contracts may be enforced in a Court.
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