Australian Fair Pay and Conditions Standard

Australian Fair Pay and Conditions Standard

The Australian Fair Pay and Conditions Standard (the Standard) is a set of five minimum statutory entitlements for wages and conditions that was introduced as part of the Howard Government's WorkChoices amendments to Australian labour law. It came into effect on 27 March 2006. The employment conditions and wages of employees who are covered by the Standard must meet or exceed its provisions. Compliance will be undertaken by Workplace Ombudsman inspectors, who have the power to investigate disputes and enforce valid claims.

Scope of the Standard

Because the changes under WorkChoices rely to a large extent on the corporations power under the Australian Constitution, the Standard does not apply to all Australian workers. It applies to all employees in Victoria, the ACT, the Northern Territory, Christmas Island and Cocos (Keeling) Island because they are already within the federal workplace relations system. In Victoria, the application of the Standard (although universal) is slightly different in terms of the way Scales and wage rates will be adjusted by the Australian Fair Pay Commission.

In other parts of Australia, the following specific categories of employers and employees are not covered by the Standard:
* workers whose employers are not constitutional corporations (unless their employers fall within other specified categories);
* employees who were bound to an Australian Workplace Agreement which was approved by the Office of the Employment Advocate prior to 27 March, 2006;
* workers covered by a Certified Agreement that was filed with or certified by the Australian Industrial Relations Commission prior to 27 March, 2006. (In the case of an agreement that was filed before this date, but not certified, the employer would have to meet the Standard until the certification took place;
* employees who are bound by a state employment agreement that was made prior to 27 March, 2006, insofar as the agreement addresses conditions otherwise addressed by the Standard.

Some entitlements under the Standard do not apply to casual employees. Generally, casuals have no entitlement to annual leave, personal/carer's leave, compassionate leave or parental leave. However, unpaid parental leave may be available to casual employees if they are eligible. Casuals are also eligible for unpaid carer's leave. In return for having no annual leave or personal leave entitlements, casuals are guaranteed a minimum casual loading percentage, which is currently set at 20%.


Ordinary Hours

The Standard provides for a maximum of 38 ordinary hours of work per week. The Standard allows for an averaging of an employees weekly hours of work over a 12 month period by written agreement between the employer and employee. Employees can also be asked to work reasonable additional hours and have the right to refuse to work hours not considered 'reasonable'. The question of what constitutes 'reasonable' will depend on the particular circumstances of the employee, but must include factors such as any risk to the employees health or safety, the hours worked by the employee in the previous four weeks, the notice given by the employer of the requirement to work the additional hours and the notice given by the employee of the refusal to work those hours, and the operational requirements of the business. [(Part 7, Division 3, Subdivision B, 226 of the "Workplace Relations Act 1996").]

For employees covered by a federal Award or Notional Agreement Preserving a State Award (NAPSA) that contains an hours of work provision, the Standard will not apply in relation to this matter for a transitional period of 3 years. [Part 7, Division 3, Subdivision B, 225 of the "Workplace Relations Act 1996").]

Annual Leave

The basic entitlement to annual leave is for 4 weeks of paid annual leave every year. All full-time and part-time employees covered by WorkChoices are entitled to paid annual leave. Part-time employees accrue their annual leave on a pro-rata basis. Annual leave accrues for each completed 4 week period of continuous service and is cumulative. Casual employees do not have an entitlement to annual leave under the Standard. Continuous shift workers get 1 extra week of annual leave every year, provided that they regularly work both Sundays and public holidays (not either Sundays or public holidays).

When taking annual leave, employees are entitled to at least the basic rate of pay they are on at the time of commencing the annual leave. It is also possible for employees to request to cash out up to 2 weeks (or the pro rata equivalent for part-time employees) of their accrued annual leave entitlement every 12 months. However, this can only occur if a term in a workplace agreement specifically permits cashing out. Requests to cash out annual leave must be in writing and can be refused by an employer. An employer must not require an employee to cash out an entitlement to annual leave, or exert undue influence or pressure on an employee.

Personal/Carer’s Leave and Compassionate Leave

Under the standard, sick leave is referred to as personal leave. Carer’s leave is leave to provide care and support to an employee’s immediate family or household member. Ten days of paid personal/carer’s leave are available for WorkChoices employees every year. For part-timer employees and those who are within the first 12 months of employment, this type of leave is available on a pro rata basis. Casual employees are not eligible for personal/carer's leave.

Personal/carer's leave is cumulative. Whilst there is no limit on the amount of accumulated sick leave that can be taken each year, there is however, a limit of 10 days paid of carer’s leave that can be taken in any given year.

On top of these basic entitlements, there is provision for an additional two days of unpaid emergency carer’s leave per occasion where an employee has exhausted their paid personal/carer’s leave entitlements. Casual employees are also entitled to unpaid carer’s leave. There is also provision for two days of paid compassionate leave per occasion, when a member of immediate family or household has a life-threatening illness or injury, or dies. Compassionate leave operates separately from personal/carer’s leave. This means it is not necessary to exhaust personal/carer’s leave entitlements to access compassionate leave.

Parental Leave - maternity, paternity and adoption

Unpaid parental leave is available up to a maximum of 52 weeks. This 52 weeks of leave can be shared between both parents at the time of the birth of a child, or the adoption of a child under five years of age. Parental leave applies to all full-time, part-time and eligible casual employees who have at least 12 months continuous service with the same employer. Casual employees become eligible when they have been employed with the same employer on a regular and systematic basis for at least 12 months with reasonable expectation of ongoing employment. These parental leave provisions also apply more broadly to employees outside of the WorkChoices system. In other words, those employed by a sole trader, trust, partnership or other unincorporated entity are also covered. Mothers must have a continuous period of 6 weeks of maternity leave immediately after giving birth to a child. Special maternity leave (unpaid) may be taken if a pregnancy is terminated within 28 weeks of the expected date of birth or pregnancy-related illness. It also requires a minimum of 12 months service for eligibility.

Minimum Pay

Under the Standard, basic hourly rates will be guaranteed rates of pay set by the Australian Fair Pay Commission. The Fair Pay Commission will set the Federal Minimum Wage (FMW), classification-based wages in Australian Pay and Classification Scales (APCSs), and casual loadings. The minimum casual loading is currently set at 20 percent. The Commission will also set special FMWs for juniors, trainees and apprentices, employees with disabilities and piece workers.

The Fair Pay Commission will decide the timing, scope and frequency of wage reviews, the manner in which they are conducted and when wage decisions will come into effect. Employees who are not covered by an APCS (other than juniors, trainees and apprentices, employees with disabilities and piece workers) must be paid at least the FMW, which is currently set at $12.75 per hour. The first decision of the AFPC raised the minimum wage to $13.47 per hour as of 1 December 2006. []

Criticism of the Standard

Opponents of the WorkChoices reforms, such as the Australian Council of Trade Unions, have a range of criticisms of the changes. In terms of the Standard, the main criticisms have been that it will not protect minimum wages and that it will undermine many current conditions and entitlements workers previously enjoyed. The possibility for cashing out annual leave, although only possible under specific conditions, has also been cited as something which undermines current entitlements.

Minimum Wages

The standard has been criticised by the ACTU on the grounds that the Australian Fair Pay Commission is not as independent as the Australian Industrial Relations Commission. According to the ACTU, the Howard Government wants to reduce the minimum wage and it will appoint people to the Fair Pay Commission who will carry out its agenda in this respect. This argument is based partially on the Howard Government's opposition to minimum wage increases in the past.

Replacing the award safety net

The ACTU has claimed that the set of five minimum conditions is not sufficiently comprehensive. They argue that employees could lose entitlements that they currently have, including wage rates based on skill levels, standard hours of work, work-related allowances, annual leave loading, redundancy pay, overtime pay, and weekend and shift work rates of pay. Employees who currently have these entitlements under an industrial instrument will retain them. However, because these are not covered by the Standard, they could be subject to negotiation between employers and employees in an Australian Workplace Agreement.

During a Senate Estimates hearing on May 29, 2006, Peter McIlwain, Head of the Office of the Employment Advocate (OEA) detailed that from a sample of 4 per cent, or 250, of the total 6,263 AWAs lodged during April 2006 after WorkChoices was introduced, that: 100% of AWAs removed at least one protected Award condition; 64% of AWAs have removed annual leave loadings; 63% of AWAs have stripped out penalty rates; 52% of AWAs have cut out shift loadings; 40% of AWAs have dropped gazetted public holidays; and 16% of AWAs, have slashed all award conditions and only the Government's five minimum conditions are satisfied. [ Hansard Senate Estimates Committee 29 May 2006] Questions to Peter McIlwain]


External links

* [ Australian Fair Pay and Conditions Standard] employer information page at the Australian Government Workplace Authority Website.

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