Transitional instruments are instruments that were made under the Workplace Relations Act 1996 that continue to operate after 1 July 2009. Transitional instruments are classified as award-based transitional instruments and agreement-based transitional instruments.
Award based transitional instruments are awards and notional agreements preserving State awards (NAPSAs).
Agreement based instruments include both collective and individual agreement based instruments. The following agreement-based transitional instruments are collective agreement-based transitional instruments:
- collective agreements;
- workplace determinations;
- preserved collective State agreements;
- pre-reform certified agreements;
- old IR agreements; and
- Section 170MX awards.
The following agreement-based transitional instruments are individual agreement-based transitional instruments:
- ITEAs (Individual Transitional Employment Agreements);
- preserved individual State agreements; and
- AWAs (Australian Workplace Agreements).
Transitional instruments continue to operate in relation to those employers, employees and employee organisations that were bound by the instrument immediately before 1 July 2009. Award and collective agreement based transitional instruments also apply to employees engaged by those employers after 1 July 2009. However, from 1 July 2009, an award-based transitional instrument will not apply to an employee (or to an employer, or an employee organisation, in relation to the employee) when the employee is classified as a high income employee [s 329 of the Fair Work Act 2009 (Cth)].
As a general rule, employee’s service with an employer before the commencement of the National Employment Standards will count as service for determining entitlements under the National Employment Standards. However the period of service will not be counted again, if the employee has already had the benefit of that entitlement. This is to prevent an employee “double dipping”.
Entitlement to redundancy pay under the National Employment Standards applies to terminations of employment due to an employee’s position being made redundant that occur on or after the commencement of the National Employment Standards, even if notice of termination was given before that date.
Annual Leave and Paid Personal/Carers Leave
If an employee accumulated leave (annual or paid personal/carers leave) before the commencement of the National Employment Standard, the provisions of the National Employment Standard will apply to that leave. The leave will be treated as if it was accrued under the National Employment Standard.
There is no obligation for an employer to hand out Fair Work Information Statements to employees who were employed before the commencement of the National Employment Standards. An employer is only obliged to give out Fair Work Information statements to new employees after the commencement of the National Employment Standards.
NB: the Fair Work Information Statement includes information covering, the National Employment Standards; modern awards; agreement-making under the Fair Work Act 2009 (Cth); the right to freedom of association; the role of the Fair Work Commission and the Fair Work Ombudsman; termination of employment; individual flexibility arrangements; right of entry (including the protection of personal information by privacy laws).
Do the content rules in the Workplace Relations Act 1996 (Cth) continue to apply to transitional instruments?
Transitional instruments continue to be subject to the content rules that applied, or would have applied, before 1 July 2009. For certain agreement-based transitional instruments, this includes rules concerning prohibited content. For award-based transitional instruments, this means that the rules in relation to allowable and non-allowable award matters are preserved.
Transitional instruments continue to be subject to the interaction rules for different types of transitional instruments that are contained in the Workplace Relations Act 1996 (Cth). These rules preserve, for example, the ability for one type of transitional instrument to operate again when another transitional instrument is terminated [see paragraphs 5(2)(a)(ii) and (b)(ii) of the Act]. For example, the following provisions of the Workplace Relations Act 1996 (Cth) will continue to operate:
- Section 349, which deals with the effect of an award while a workplace agreement in operation;
- clause 38A of Schedule 8, which deals with the operation of NAPSAs; and
- clause 2 of Schedule 7, which preserves Section 170LY of the pre-WorkChoices Workplace Relations Act and provides thata pre-reform certified agreement prevails over an award to the extent of any inconsistency.
Different rules apply to the interaction between a transitional instrument and an instrument made under the Fair Work Act 2009 (Cth).
NB: as of 1 January 2010, modern award wages, pay scales and the National Employment Standards apply to transitional instrument covered parties.
In what circumstances can a transitional instrument be varied?
The Fair Work Commission may make a determination varying a transitional instrument in limited circumstances. Transitional instruments can be varied to:
- resolve ambiguity or uncertainty in the instrument;
- resolve an uncertainty or difficulty relating to the interaction between the instrument and a modern award (e.g., a pre-reform certified agreement will interact with a modern award where a modern award replaces an unmodernised award);
- remove or vary provisions that are inconsistent with the general protections framework in Part 3-1 of the Fair Work Act 2009;
- resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards.
Variations of transitional instruments will operate from a day specified in the determination made by the Fair Work Commission, and variations may be back dated.
The Fair Work Commission may also vary a transitional instrument if the instrument is referred to it by the Human Rights and Equal Opportunity Commission, and the Fair Work Commission considers that the instrument requires a person to do an act that would be unlawful under Part II of the Sex Discrimination Act 1984 (but for the fact it was done in direct compliance with the transitional instrument).
In addition to rules about variation and termination that apply to all transitional instruments, an award can also be:
- varied to maintain minimum safety net entitlements;
- varied to bind additional employers, employees or organisations; or
- revoked where it is obsolete or no longer capable of operating.
However, an award cannot be varied or revoked under this item after the end of the bridging period, except:
- to maintain minimum safety net entitlements; or
- as a result of Fair Work Australia finalising a matter on foot before the end of the bridging period.
- NB: a transitional award cannot be varied to bind new parties after the bridging period.
During the bridging period, pre-reform certified agreements and preserved collective State agreements can also be varied or extended by Fair Work Australia under the relevant provisions of the Workplace Relations Act 1996 (Cth) which are preserved by the Fair Work Act 2009 (Cth). Applications cannot be made after the end of the bridging period.
Transitional instruments continue to operate until they are terminated or replaced by an enterprise agreement.
In what circumstances can collective agreement‑based transitional instruments be terminated?
A collective agreement-based transitional instrument can be terminated in accordance with the provisions of Part 2-4 of the Fair Work Act 2009 (Cth) as if the instrument were an enterprise agreement. This means that the parties covered by a collective agreement‑based transitional instrument can jointly agree to terminate the instrument at any time. It also means that once the instrument has passed its nominal expiry date, an employer, employee or employee organisation covered by the instrument may apply to the Fair Work Commission for the termination of the instrument. The Fair Work Commission must terminate the instrument if it is satisfied that it is not contrary to the public interest to do so and that it is appropriate to terminate the agreement taking into account all the circumstances.
In what circumstances can individual agreement‑based transitional instruments be terminated?
The Fair Work Act 2009 (Cth) provides uniform rules for the termination of all individual agreement-based transitional instruments, whereas previously under the Workplace Relations Act, different termination rules applied to Individual Transitional Enterprise Agreements, preserved individual State agreements, Australian Workplace Agreements (AWAs) and pre-reform AWAs.
An individual agreement-based transitional instrument can be terminated at any time by written agreement between the employer and employee covered by the instrument. Before it can operate, a termination would need to be approved by the Fair Work Commission.
As soon as an individual agreement based transitional instrument has passed its nominal expiry date, either the employer or employee covered by the instrument may unilaterally terminate the agreement by giving 90 days notice.
In addition to these termination provisions, conditional termination of an individual agreement based instrument is available. Conditional terminations are intended to facilitate the orderly transition of employees covered by individual agreement-based transitional instruments to an enterprise agreement by terminating the individual agreement as soon as the proposed new enterprise agreement comes into operation. An employee who is covered by a conditional termination can fully participate in bargaining for an enterprise agreement whether or not the transitional instrument to which the conditional termination relates has passed its nominal expiry date.
Where the transitional instrument has not passed its nominal expiry date, a conditional termination must be signed by both the employer and employee. However, where the transitional instrument has passed its nominal expiry date, either the employer or the employee can unilaterally make a conditional termination.
When an enterprise agreement is made that covers an employee who is also covered by a conditional termination, the conditional termination must accompany any application to Fair Work Australia for approval of the enterprise agreement. Provided the formal requirements relating to the conditional termination have been met, the transitional instrument then terminates when the enterprise agreement comes into operation.
What is the process for terminating individual agreement-based transitional instruments?
The employer or employee wishing to terminate the agreement must:
- make a written declaration identifying the instrument and stating that the employer or employee wishes to terminate it;
- at least 14 days before applying to the Fair Work Commission for the approval of the termination, provide a notice to the other person setting out certain matters; and
- having provided the notice as required, apply to the Fair Work Commission for approval of the termination.
NAPSAs (other than a notional agreement that is an enterprise instrument) will terminate on the 4th anniversary of the Fair Work (safety net provisions) commencement day or on a later date prescribed by the regulations.
Enterprise awards will expire on 31 December 2013, if there has been no application for a modern enterprise award, or revocation of award is made by then.
Award based transitional instruments will become obsolete when they are replaced by a modern award.
The following kinds of transitional instruments that apply to non-national system employers terminated by 26 March 2011:
- Division 3 pre-reform certified agreements;
- old IR agreements;
- Section 170MX awards; and
- WR Act Schedule 6 transitional awards.
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