AWA abolition creates hidden trap for employers

Employers will come under new pressure to get their paperwork right with news that Federal Parliament is almost certain to consign AWAs to the dustbin this week.

Coalition Senators yesterday confirmed they would not reject Labor’s transitional IR legislation, despite criticising it as “fundamentally flawed” and “poorly drafted” in a Senate committee report into the law.

That means employers will soon no longer be able to enter into AWAs with staff – the bill provides that AWAs will be abolished 14 days after the bill is passed, which is likely to be this week.

But the passage of the law also creates some pitfalls for employers that have already lodged some AWAs with the Workplace Authority for approval, according to Australian Business Lawyers managing partner Tim Capelin.

Under the current system, if an AWA lodged with the Workplace Authority fails the fairness test or has some other problem, an employer is generally give two opportunities to rectify the problem before the AWA is rejected.

If an AWA is rejected – as more than 6600 AWAs had been as of November last year – the employer could be liable for backpay or other compensation, but there was nothing stopping them lodging a new AWA down the track.

Once the new laws are in place, however, that will no longer be an option because no new AWAs will be able to be entered into.

That means employers are now under pressure to make sure they comply with any Workplace Authority requests to rectify AWAs or provide more information within the time provided – or, Capelin says, risk losing the opportunity to enter an AWA with that employee for good.

“Once you miss out, you miss out; there is no option if an AWA is rejected to attempt to lodge another one,” Capelin says.

Employers who hire staff on fixed term agreements may also find themselves having to radically restructure their employment arrangements.

Under the new law, an employee who previously worked for a business and is then re-hired cannot be put on to the new Individual Transitional Employment Agreements.

Employers in the construction industry, where short-term contract work is the norm, and seasonal employment users like fruit farmers, could be those most affected by the new restriction.

“Businesses who use fixed term arrangements because they don’t want to use contractors may have been using AWAs as an alternative. That would have been sensible under the older laws but that’s not open now,” Capelin says.