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A level playing field for employers and employees in Victoria

Feature Articles

Cite as: (2004) 78(3) LIJ, p.58

Without much fanfare, 1 January 2004 marked the start of a new industrial relations system for Victoria - at least for the estimated 350,000 Victorian workers not covered by federal awards or agreements.

By Tim Greenall

The passing by the federal Parliament of the Workplace Relations Amendment (Improved Protection for Victorian Workers) Act 2003 (Cth) (the federal Act), following the earlier passing by the Victorian Parliament of the Federal Awards (Uniform System) Act 2003 (Vic) (the Victorian Act) represented an all too rare exercise in cooperation between a federal and state government. It also maintains Victoria’s largely unitary industrial relations system which commenced in 1996 when the then Kennett government abolished Victoria’s state system and referred certain industrial relations powers to the federal government. Indeed, it could be said that the Victorian Act completed that exercise by referring additional powers, including the power to make common rule awards applying federal award conditions, as common rules in Victoria.

New employment conditions for Victorian employees

Schedule 1A of the Workplace Relations Act 1996 (Cth) (the WR Act) sets out the minimum terms and conditions of employment for employees in Victoria who are not covered by federal awards or agreements (hereafter referred to as Victorian employees). The federal Act creates the following new minimum entitlements for Victorian employees with effect from 1 January 2004:

  • paid personal leave of eight days for each year worked instead of sick leave of five days per year;
  • paid bereavement leave of two days on the death of a member of the employee’s immediate family or household; and
  • ordinary time extra if an employee works in excess of 38 hours in a working week at the minimum hourly rate applicable to the employee.

The new personal leave may be taken as carer’s leave for up to five days of the eight days to care for a member of the employee’s immediate family or a member of the employee’s household who is ill and requires the employee’s care and support. There are special rules for the accrual of personal leave during the first year of employment and part-time employees accrue personal leave on a pro rata basis.

The federal Act also sets out the following new rules about the taking of annual leave which:

  • accrues on a pro rata basis and is cumulative;
  • is credited on the anniversary of the employee’s employment;
  • counts as service for all purposes;
  • is to be paid at the rate that, immediately before the leave is taken, is the employee’s ordinary hourly rate of pay;
  • is to be paid when the employee takes annual leave or leaves his or her employment, as the case may be;
  • must be taken within 12 months after the end of the year in which it accrued unless the employee and the employer have agreed otherwise; and
  • must be taken by an employee when directed to take it by the employer, if the employer directs the employee to do so because the employer shuts down his or her business for a period.

These new rules do not affect any annual leave which has accumulated prior to 1 January 2004.[1]

The federal Act confers on employers a new statutory right to stand down employees who cannot be usefully employed because of any strike, breakdown of machinery or any stoppage of work for any cause which the employer cannot reasonably be held responsible, and the deduction of pay during that period.[2]

The federal Act clarifies and strengthens the powers of inspectors,[3] the requirements to keep employment records,[4] and treats a failure to comply with the minimum terms or conditions of employment for Victorian employees as a breach of award for the purposes of the penalty and recovery of wages provisions under ss178 and 179 respectively of the WR Act.[5]

It also gives the Victorian government the right to intervene in the Australian Industrial Relations Commission (AIRC) in relation to a bargaining period for negotiating a certified agreement if one or more of the employees to be covered by the agreement is an employee in Victoria, to deal with the perception that the Victorian government has been unable to intervene in disputes affecting the greater good of the state.[6]

Common rule awards

The WR Act gives the AIRC the power to declare any term of any award made for the purpose of preventing or settling an industrial dispute to be a common rule in a territory for an industry in relation to which the industrial dispute arose.[7] The federal Act extends the AIRC’s power to make common rules by simply extending the existing reference to a territory to also include a reference to Victoria.[8]

It is important to note that the AIRC’s power to declare an award to be a common rule in a territory applies only in relation to an “industry”[9] and in relation to which an “industrial dispute”[1]0 arose. This imports the requirements of an “industry” and an “industrial dispute” into the AIRC’s power to declare common rules in Victoria. The Victorian Act introduces the following inclusive definition of “industry” into the Commonwealth Powers (Industrial Relations) Act 1996 (Vic) which refers the common rules power to the federal government:

  • any business, trade, manufacture, undertaking or calling of employers;
  • any calling, service, employment, handicraft, industrial occupation or vocation of employees; and
  • a branch of an industry and a group of industries.[1]1

In the legal profession, it is likely that the Victorian Legal Professional, Clerical and Administrative Employees Award 1993, which was consented to by a number of labour law firms, will be declared to apply by common rule to the legal “industry” in Victoria. If this is the case, this award will apply to articled clerks and employed solicitors up to and including third year and support staff (and possibly some management roles) and introduce the following changes:

  • new pay rates based on a classification structure requiring role gradings;
  • higher minimum rates of pay, especially for casuals;
  • overtime for support staff and articled clerks for work in excess of 38 hours per week or outside normal hours; and
  • other entitlements such as annual leave loading of 17.5 per cent and redundancy entitlements.[1]2

The AIRC will not make a declaration of common rules until it has published a notice specifying the manner in relation to which it is proposed to declare a common rule and inviting any organisation or person interested and wanting to be heard to appear before it.[1]3

Under the WR Act, a federal award will prevail over an inconsistent state law or where the federal award covers the field.[1]4 However, the federal Act states that the AIRC’s new common rules power is not intended to exclude or limit the operation of a law of Victoria that is capable of operating concurrently with the common rule,[1]5 e.g. long service leave entitlements set out under the Long Service Leave Act 1992 (Vic) or occupational health and safety requirements under the Occupational Health and Safety Act 1985 (Vic).

An award declared to apply to an industry in Victoria by common rule will prevail over terms and conditions of a contract of employment to the extent that the contract is less favourable to an employee, but the contract will apply where the terms and conditions are more favourable than in the award.[1]6 The Victorian Act had provided that an employer who became bound by a common rule order was entitled to set off a new award entitlement against the contract of employment (as that contract existed before the coming into force of the common rule order).[1]7 However, that provision of the Victorian Act did not come into force, so it now seems unlikely that an employer can set off more generous contract provisions against award entitlements. While the federal Act does not include a set off provision as the Victorian Act did, it does provide a grace period of 12 months from 1 January 2004 before a declaration of common rule made by the AIRC will come into force in an industry in Victoria.[1]8

TIM GREENALL is a partner with Abbott Stillman & Wilson and chair of the Law Institute’s Workplace Relations Section.

[1] Personal leave, bereavement leave and annual leave do not apply to casuals.

[2] Section 509A WR Act.

[3] Section 86 WR Act.

[4] Section 514 WR Act.

[5] Section 506 WR Act.

[6] Section 170MW(1A) and a right of appeal under s45(3A) WR Act.

[7] Section 141 WR Act.

[8] Section 493A WR Act.

[9] R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297 (the Social Welfare case) but see the narrower s4 definition of “industry” in the WR Act.

[10] Section 89A WR Act – sets out the “allowable matters” for the making of an award by the AIRC.

[11] Section 3 Commonwealth Powers (Industrial Relations) Act 1996 (Vic) which mirrors the definition of “industry” in s4 WR Act.

[12] See further Kriss Will, “Changes are upon us ... employment conditions in Victorian law firms”, paper presented to the Australian Legal Practice Management Association in September 2003.

[13] Section 493A(3) WR Act.

[14] Section 152(1) WR Act.

[15] Section 493A(4) WR Act.

[16] Section 508 WR Act.

[17] Section 7(3) of the Victorian Act.

[18] Item 13 of Schedule 3 of the federal Act.


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