Plain English Guide to Awards, Workplace Agreements and Employment Contracts

What are awards and do they affect me?

An award is a standard of minimum industrial terms and conditions applying to specific groups of employees. Whether your employees are covered by an award depends on whether they fit into the occupations covered by an award.

Are all employees covered by awards?

No. For example, managers are generally not covered by awards, and many employees in the information technology sector are not covered by awards.

However, an employee is not “award free” only because weekly pay is greater than required by the award. An employee within the scope of an award will be covered by the award, and entitled to all of the other benefits specified by the award. Hours of work, overtime and leave entitlements often create problems when over-award payments are intended to cover all entitlements, but this has not been clearly agreed with the employee.

What are Workplace Agreements?

The federal Workplace Relations Act allows employers and employees to make a “workplace agreement” which can displace award terms. The Rudd Government has removed the provisions allowing individual workplace agreements (AWAs) completely after 1 January 2010, and only allowing them in restricted circumstances up to that date. So the principal workplace agreement option is a “collective workplace agreement” between the employer and a group of employees.

It is possible to reorganise various classes of leave or hours of work, or to tie pay to performance. However, the workplace agreement must pass the “no disadvantage” or “no net detriment” test: overall, the employees have to be as well or better off than under the award.

To displace an award, a collective workplace agreement has to be registered with the Workplace Authority. The Authority checks the proposed agreement to ensure that it passes the “no disadvantage” test. Unions can be parties to workplace agreements, or the agreement can be with the employees directly. Employees are entilted to have union representation if they wish in negotiations.

What is the difference between an employment contract and a workplace agreement?

It is always possible for an employer to have an employment contract with an individual employee. The contract may be a letter of offer accepted by the employee, a letter of appointment, or a more formal type of contract. Such a contract is a private matter between employer and employee and does not have to be registered with the Workplace Authority or anywhere else. However, an employment contract cannot displace award terms and conditions, so if an award applies, it forms the background to the employment contract, and if the terms of the contract are inconsistent with the award, then the award terms will apply.

The majority of employees have an employment contract rather than a workplace agreement. Dradfting an employment contract to comply with current legislation, and to optimise the positions of the employer and the employee is also a complex matter, and it is very often worthwhile having employment contract terms checked by an employment lawyer to highlight any problems and draft any additional provisions which may be desirable.

The potential issues involved with awards and collective workplace agreements are many. It is important to speak with an experienced employment lawyer with commercial expertise to make sure you understand the possible ramifications when dealing with this complex area of the law.

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