A number of transitional instruments operate in the national system as a result of provisions preserving industrial instruments in the Fair Work Act 2009 (FW Act) and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (TPCA Act).
Agreements that were in operation prior to 1 July 2009 and applied to employers and employees under the (repealed) Workplace Relations Act 1996 are known in the FW Act as “transitional instruments” (Schedule 3, item 2(3), TPCA Act).
It is important that businesses in the national system understand which transitional instruments may have been binding on their business prior to 1 July 2009, in order to pay their employees correctly and avoid costly underpayment errors.
Types of transitional instruments
In Western Australia there are several types of transitional instruments. These include:
- collective agreement-based transitional instruments
- individual agreement-based transitional instruments.
Each of these transitional instruments is described below.
Collective agreement-based transitional instruments
These transitional instruments include:
- employee/union collective agreements
- workplace determinations
- preserved collective state agreements
- pre-reform certified agreements
- old IR agreements
- section 170MX awards.
Individual agreement-based transitional instruments
Individual agreement-based transitional instruments include:
- individual transitional employment agreements (ITEAs)
- Australian Workplace Agreements (AWAs)
- preserved individual state agreements
- pre-reform AWAs.
Interaction with the national employment standards
Where a term of an agreement-based transitional instrument is less favourable to an employee, than an entitlement of the national employment standards (NES), the term of the transitional instrument will have no effect.
Interaction with modern awards
While an agreement-based transitional instrument applies to an employee or employer, a modern award does not apply.
If the agreement-based transitional instrument is a pre-reform certified agreement, an old IR agreement or a section 170MX award, both the transitional instrument and the modern award apply. In this instance, the agreement-based transitional instrument prevails over the modern award to the extent of any inconsistency.
The base rate of pay payable to the employee under an agreement-based transitional instrument, however, must not be less than the base rate of pay that would be payable to the employee under the modern award if the modern award applied to the employee.
Variation of agreement-based transitional instruments
Transitional agreements can only be varied in limited circumstances such as removing ambiguity or uncertainty in the agreement. In these limited instances, employees or the employer must apply to the Fair Work Commission (FWC) to vary the agreement.
Termination of agreement-based transitional instruments
An agreement-based transitional instrument can generally be terminated in three ways:
- termination by approval/agreement
- unilateral termination
- termination by the FWC.
Termination by approval/agreement: Most agreement-based transitional instruments can be terminated by approval between all parties to the agreement.
Generally, collective agreement-based transitional instruments can be terminated upon application to the FWC when a valid majority of employees, whose employment is covered by the agreement, approve the termination. The employer must take reasonable steps to give employees notice of the time, place and method of voting and a reasonable opportunity to decide whether they want to approve the proposed termination.
In the case of individual agreement-based transitional instruments (such as AWAs and ITEAs), termination can be agreed to at any time in writing between the employee and employer. Alternatively, AWAs and ITEAs can be conditionally terminated subject to the FWC approving a new enterprise agreement that covers the employee and employer.
These terminations generally take effect when the FWC approves the termination.
Unilateral termination: A number of agreement-based transitional instruments, particularly those made under the Workplace Relations Act 1996, will contain a nominal expiry date. A right exists for either party (employer or employee) to unilaterally terminate the agreement-based transitional instruments once it reaches or passes its nominal expiry date.
To terminate the agreement, either party must apply to the FWC. The termination will generally take effect 90 days after approval from the FWC.
Termination by the FWC: the FWC has the power to terminate a collective agreement-based transitional instrument that has passed its nominal expiry date. In terminating the agreement, the FWC must be satisfied that it would not be contrary to the public interest to terminate the agreement.
For further information on transitional instruments please contact CCI’s Employee Relations Advice Centre on (08) 9365 7660 or email email@example.com.