Home » WORKCHOICES - THE AUSTRALIAN FAIR PAY AND CONDITIONS STANDARD WHAT DOES IT MEAN FOR YOUR BUSINESS?

with it, a new era in workplace relations in Australia. The High Court of Australia is currently considering the constitutional challenge brought by various States against the legislation. Despite this challenge, the legislation has already come into effect and employers and employees throughout Australia need to understand the impact of these changes. One of the key changes is the introduction of a new minimum standard, the Australian Fair Pay and Conditions Standard. In this article, we will review the components of the Standard and what it means for employers.

Australian Fair Pay and Conditions Standard - 5 basic entitlements

The Standard comprises:
· Basic rates of pay and casual loading;
· Hours of work;
· Annual leave;
· Personal leave;
· Unpaid parental leave.

To whom does the Standard apply?

It applies to:
· all persons employed by constitutional corporations in Australia;
· all employees in ACT and Northern Territory (irrespective of whether they are employed by constitutional corporations or not);
· all employees in Victoria - see below for details of how the Standard operates for award covered employees in Victoria;
· all persons employed by the Commonwealth or by Commonwealth authorities;
· all waterside workers, maritime employees and flight crew officers;

but not to:
· employees who are bound by an Australian Workplace Agreement (AWA) approved by the Office of the Employment Advocate (OEA) before 27 March 2006 ;
· employees whose employment is covered by a certified agreement certified by the Australian Industrial Relations Commission (AIRC) before 27 March 2006 ;
· employees whose employment is covered by a state employment agreement.

Award covered employees in Victoria

If an employee is covered by a Federal award (whether as a respondent or as a result of a common rule declaration) and:
(a) the employer is a constitutional corporation:
· the award will continue to apply unless changed during the award rationalisation process; and
· the Standard will apply unless the award is more generous (except for hours of work where the award provision will apply).

(b) the employer is not a constitutional corporation:
· the award will continue to apply for a maximum of 5 years after 27 March 2006;
· if the employer does not become incorporated during this period, the Standard will apply at the end of the five year period.

Other employees in Victoria

Prior to 27 March 2006 employees in Victoria who were not covered by a federal award, certified agreement or AWA, were previously covered by Schedule 1A of the Workplace Relations Act 1996. Schedule 1A has now been replaced by the Standard. The Standard will therefore apply to all employees previously covered by Schedule 1A.

The Standard - entitlements

Basic rates of pay and casual loading - the Australian Fair Pay Commission will set the federal minimum wage (currently $12.75), minimum award classification rates of pay and casual loadings. The Commission is receiving public submissions on its first minimum wage determination and is likely to deliver its determination between September and November 2006 .

Hours of work - the Standard requires that employees cannot be required or requested to work:
· more than 38 hours per week plus reasonable additional hours; or
· an average of 38 hours per week over a period of up to 12 months (if the employee and the employer agree in writing) plus reasonable additional hours.

Annual leave - all employees other than casual employees have a minimum paid entitlement to annual leave based on their 'nominal hours' worked. For a full time employee, the entitlement to annual leave is 4 weeks. Shift workers are entitled to a further week of annual leave. An employee can cash out a portion of their annual leave (a full time employee can cash out 2 weeks annual leave per year) provided that the employer and employee have entered into a workplace agreement .

Personal leave - this includes sick leave, carer's leave and compassionate leave.

Paid sick/carer's leave - all employees other than casual employees are entitled to a minimum paid entitlement to paid sick/carer's leave based on their 'nominal hours' worked. For a full time employee, the entitlement to paid sick/carer's leave is 10 days.

Unpaid carer's leave - all employees, including casuals, are entitled to 2 days unpaid carer's leave per occasion which can only be taken after the employee has exhausted their other paid personal leave entitlements.

Evidence - an employer may require the employee to provide evidence in support of their absence on sick/carer's leave in the form of a medical certificate from a registered health practitioner or if this is not reasonably practicable, the employee may provide a statutory declaration .

Compassionate leave - all employees other than casual employees are entitled to 2 days paid compassionate leave per occasion where a member of the employee's immediate family or household contracts or develops a personal injury or illness that poses a serious threat to their life or dies. The employee is required to give the employer such evidence that the employer reasonably requires of the illness, injury or death.

Parental leave - all eligible employees are entitled to unpaid parental leave (maternity , paternity or adoption leave ) of 52 weeks. To be eligible for this leave, the employee must have completed at least 12 months continuous service with their employer before the expected date of birth of the child or be an eligible casual employee .

Implications for employers

This review of the Standard is only an overview. Employers should carefully examine whether they are required to comply with the Standard and if it does apply to their employees, each component of the Standard will need to be analysed to see whether any changes are required to the general terms and conditions of employment in existence at the workplace.

For advice on the Australian Fair Pay and Conditions Standard and what it means for your business, contact Moores Legal Workplace Relations Department.