Will Labor’s ITEAs make good business sense?

Most businesses are likely to move straight to awards and collective agreements rather than utilising the new transitional statutory agreements available under Labor’s proposed laws, IR experts say.

Under Labor’s IR plans, AWAs will be abolished and replaced with Individual Transitional Employment Agreements (ITEAs), new two-year statutory agreements designed to help employers move from individualised arrangements to awards, or collective agreements.

The Coalition effectively endorsed ITEAs yesterday after IR spokeswoman Julie Bishop conceded they provide adequate flexibility for employers and indicated the Opposition will most likely allow Labor’s laws to pass through the Senate.

In fact Bishop indicated that the Coalition would be seeking an amendment to Labor’s legislation in the Senate to extend the potential term of ITEAs to as far away as 2012.

But IR advisers in leading business groups today have questioned whether there will be any advantage for most businesses in using the ITEAs given that under the current Labor proposal they would expire on 31 December 2009.

CCI Victoria legal principal Peter Vitale says while some big employers in the resources sector might find value in the ITEAs, he believes take up of the agreements in other sectors will be fairly limited.

“People looking to renew pre-existing AWA arrangements in circumstances where the workforce is happy with its arrangements might go down that track,” Vitale says. “But considering the sensitivity in the workforce to individual agreements, most business are likely to look at the short time frame and wonder if they’re worth the trouble.”

Master Builders Association legal counsel Richard Calver says ITEAs do not provide businesses with much flexibility.

“Unless there are corporate reasons not to have collective agreements, I would advise employers not to enter ITEAs,” Calver says. “We would suggest that they accept that the legislation will change and focus on fixing collective agreements they can live with in the long term.”

ITEAs differ from the AWAs that currently exist in several ways:

• Employers can only use ITEAs if they had staff employed on AWAs before 1 December 2007. Only new employees are eligible to go on ITEAs.
• The ITEA no-disadvantage test requires employees not to be disadvantaged against an applicable collective agreement, while the old fairness test only required AWAs to be no worse than the relevant award. (Collective agreements tend to have terms more favourable to employees.)
• ITEAs will have a nominal expiry date of 31 December 2009.

For more on Labor’s IR changes, see Peter Vitale’s rundown on the laws and what they will mean for your business.