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A massive overhaul of the workplace relations system is currently being contemplated by the Federal Government. No draft legislation has yet been published but information is available on some of the proposed changes(1). The Government advises that one of its main objectives is to create a simpler workplace relations system which is less costly for small business and with less red tape.(2). In this edition of Employment Alert, we review some of the areas where change is being contemplated.

Overview of the proposed changes

Some of the proposed changes include:

Australian Fair Pay Commission (AFPC) - it is intended that this new body will be established to set minimum wage rates including wage rates within awards. As a result, the Australian Industrial Relations Commission will be stripped of its power to set minimum wages and will no longer adjudicate over the safety net review cases. If all goes according to the Federal Government's plan, the AIRC will have delivered its final national wage case decision on 7 June 2005, when it ordered a $17 per week across-the-board wage increase(3).

Minimum conditions of employment - the Government intends to set out in legislation key minimum conditions of employment such as annual leave,personal/carer's leave (including maternity leave) and maximum ordinary hours of work. These conditions together with the minimum wages set by the AFPC will form the Australian Fair Pay and Conditions Standard.

Australian Fair Pay and Conditions Standard - this standard will replace the no-disadvantage test and will be the new test for all agreements.

Change in agreement making - it is intended that the Office of the Employment Advocate will review all collective and individual agreements. One of the effects of this will be that the AIRC's powers to approve certified agreements will discontinue. Agreements will take effect from the date of lodgement as opposed to the date of certification or approval and all agreements will be able to run for up to 5 years.

The impact of these changes insofar as AWAs are concerned, is that future AWAs need only to include:

  • a rate of pay for ordinary hours that is not less than the rate set by the AFPC; and
  • provisions corresponding to the minimum standards contained in the legislation(4).

As a result, award rights such as overtime, redundancy pay, long service leave, rights to study leave, lunch breaks/tea breaks and leave loading would all be removed(5) - and nor would the employer need to provide a trade-off where such a benefit is not included in an AWA (as is currently the case).

Allowable award matters - the Government intends to reduce the number of allowable award matters in awards by removing matters which relate to jury service, notice of termination, long service leave and superannuation. These matters are covered by existing legislation. It is also intended that a task force be established to rationalise existing awards and award classification structures.

Unfair dismissal - the Government proposes to exempt businesses which employ up to 100 employees from unfair dismissal laws. It is uncertain whether and how the exemption will apply if the employer is bound by a federal award either directly or via the common rule award system (currently, the law provides that employees who are covered by an industrial instrument have automatic access to the AIRC for unfair dismissal). It is also proposed that an employee will be required to serve a qualifying period of six months (as opposed to the current three months) before they can pursue an unfair dismissal remedy.

Redundancy payments - the Government proposes to exempt small business from making redundancy payments.

Abolition of State industrial relations systems - The Federal Government intends to establish a unified national workplace relations system which will replace the six different workplace relations systems currently in operation in Australia. Victoria is not directly affected by this proposal as in 1996 the Victorian Government referred most of its industrial relations powers to the Commonwealth Government. This allowed for the establishment of a single framework of laws regulating industrial matters in Victoria through the Workplace Relations Act 1996(6).

Prime Minister Howard maintains that a single set of national laws on industrial relations ''is the next logical step towards a workplace relations system that supports greater freedom, flexibility and individual choice ' this is not about empowering Canberra. It is about liberating workplaces from Colac to Cooktown' (7).

The Prime Minister's views are not shared by all, however. At the 3 June 2005 meeting of the Council of Australian Government (COAG), the Commonwealth proposed that COAG agree to work towards achieving a uniform national system of workplace relations through referrals of the necessary constitutional power from the States to the Commonwealth. The States responded by advising that they would not refer their powers8. The Federal Government intends to pursue its plans for a national workplace relations system further by relying on the corporations power. This could result in a constitutional challenge in the High Court of Australia.


While many employers and employer organisations are enthusiastic about the proposed changes, others are deeply concerned about the Federal Government's intentions. The final package of reforms may look somewhat different from those currently being discussed as it is possible that in order to secure certain key reforms, the Government may trade-off or amend others which are lower on its agenda. Nevertheless, it is hard to see where effective opposition to the Government's proposals will come from after the Government gains control of the Senate on 1 July 2005.

We will keep a close watch on developments and will report back on these matters in future editions of Employment Alert.

Peter Andrew, Consultant Tel: (03) 9843 2108 Email:

Frances Anderson, Lawyer Tel: (03) 9843 2122 Email:


1 See - A plan for a modern workplace

2 The Howard Government's Plan - information for small business

3 case no. PR00205, 7 June 2005

4 The radical change - AWAs, Ingmar Taylor

5 ibid


7 Reflections on Australian Federalism, the Hon John Howard MP, speech to the Menzies Research Centre 11 April 2005


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