ALERT DIGEST 12 of 1994

Part 1

The Committee has considered the following Bill
Employee Relations (Amendment) Bill

The Committee reports on the following Bill
Employee Relations (Amendment) Bill

1.1

This Bill was introduced into the Legislative Assembly on 12 October 1994 by The Honourable Phil Gude MP with The Honourable Pat McNamara MP.

1.2

A Subcommittee of the Committee held a meeting with Ms Karen Batt from the State Public Services Federation on 2 November 1994. Ms Batt made a submission to the Subcommittee. The relevant extract is inserted at 1.8. In response to a request for further information and comments, the Minister wrote a letter to the Committee dated 3 November 1994. The relevant extracts are inserted at 1.6, 1.7 and 1.8.

1.3

This Bill amends the Employee Relations Act 1992. Its purposes are to:-

facilitate the setting (by compulsory arbitration, if necessary) of minimum wages for each work classification within in an industry sector;
make further provision with respect to the minimum entitlements of employees;
remove the power of the Employee Relations Commission to make awards;
alter the rules with respect to access to the Employee Relations Commission;
overturn certain decisions of the Employee Relations Commission in relation to enterprise bargaining in the public sector;

1.4

Clause 4(1) amends section 12 which relates to the parties' ability to change employment agreements. Parties to a collective employment agreement may not vary any term of the agreement unless the variation is necessary to remove an ambiguity or uncertainty or to make the agreement comply with section 14(4) or a minimum term or condition of employment under section 25(1). Section 14(4) provides that employment agreements must contain provisions that set out procedures to settle claims or disputes and for the standing down of employees because of a strike. Section 25(1) provides that an award must contain provisions that set out procedures to settle claims or disputes and for the standing down of employees because of a strike.

Clause 4(2) amends section 14. If an employment agreement does not at any time comply with subsection (4), (subsection 4 sets out the particular provisions that an employment agreement must contain) it is deemed to contain the stand-down and settlement of dispute procedures contained in Schedule 5.

1.5 _Ż Abolition of awards

Clause 5 abolishes the award system by repealing Part 3 of the Act.

1.6 _Ż New Part 3 - Minimum entitlements of employees

Clause 6 inserts a new Part 3 into the Act.

Section 4D(a)(i) Trespasses unduly upon rights or freedoms

New section 20 provides that the Commission may declare industry sectors and work classifications in relation to a declared industry sector. However the Commission may only declare an industry sector after a reference or a recommendation from the Minister under section 113. Pursuant to section 113, the Minister may refer an industrial matter or a dispute to the Commission if the Minister believes it is in the public interest to do so.

The Committee notes the comments in the Second Reading Speech:-

"In line with the abolition of the award stream, minimum wage orders of the Commission will centre on a group of industry sectors. I can indicate to the House that those industry sectors are likely to be as follows:

A. AGRICULTURE, FORESTRY AND FISHING
B. MINING
C. MANUFACTURING
D. ELECTRICITY, GAS AND WATER SUPPLY
E. CONSTRUCTION
F. WHOLESALE TRADE
G. RETAIL TRADE
H. ACCOMMODATION, CAFES AND RESTAURANTS
I. TRANSPORT AND STORAGE
J. COMMUNICATION SERVICES
K. FINANCE AND INSURANCE
L. PROPERTY AND BUSINESS SERVICES
M. GOVERNMENT ADMINISTRATION
N. EDUCATION
O. HEALTH AND COMMUNITY SERVICES
P. CULTURAL AND RECREATIONAL SERVICES
Q. PERSONAL AND OTHER SERVICES

There is also the possibility that an additional "general" sector may be introduced.

Within each industry sector, a minimum wage will be set in each of a group of indicative work classifications."

The Committee notes that the Commission may only declare an industry sector after a reference or recommendation from the Minister under section 113. The Committee was concerned that the provision may contravene Section 4D(a)(i) in that it appears to trespass on the right of employees who are now no longer covered by an award and not in a "declared industry sector" to go to the Commission to set and adjust a minimum wage. The Committee wrote to the Minister on 26 October 1994. The Minister responded by way of a letter dated 3 November 1994. The relevant extract is set out: -

"5.5 _Ż Minimum Wages

A number of things may be said in response to this ......

4. First, the provisions of the bill which would allow a party to apply to the Employee Relations Commission of Victoria ("ERCV") for the purpose of having the Commission set or adjust a minimum wage, do not have any equivalent under the current provisions of the Employee Relations Act 1992 ("the Act"). Therefore, there is currently no capacity for any such application to be entertained by the ERCV, and this capacity will not come into existence until the bill becomes law. This being the case, there is no right to be removed by the bill.

5. Second, the transitional provisions of the bill provide that employees remain entitled to their current rate of pay, even where it exceeds a minimum wages order relevant to that employee which is made by the ERCV pursuant to the provisions of the bill. Thus, no employee will suffer any detriment in relation to their level of pay because of the bill.

6. Third, in relation to the coverage of employees by the Industry Sectors indicated in the second reading speech. The government is confident that the listed Industry Sectors will provide comprehensive coverage of the Victorian workforce. It is nevertheless recognised that some employees may not conveniently fall within a named Industry Sector. For this reason, Minister Gude has said publicly, and in the second reading speech, that he expects a "General" Industry Sector to be introduced. Indeed, the Minister has written to the President of the ERCV asking that the Commission consider this issue before making its final recommendations on Industry Sectors. Furthermore, the bill provides a mechanism to incorporate new industry sectors when a body of employees becomes significant enough to justify discreet recognition within the scheme of the bill."

The Committee notes the Minister's comment that a "General" industry sector will be introduced, in which case, the provision would not contravene section 4D(a)(i) of the Parliamentary Committees Act 1968.

New section 21 provides that the Commission in Full Session may set and adjust a minimum wage for employees within a work classification declared by it under section 20(1) whose terms of employment are such that coverage by a system of minimum wages is appropriate. A minimum wage may be different for different categories of employee within the work classification according as to whether the employee is full-time, part-time, a junior employee or employed on a casual or piece rate basis.

New section 22 provides that the Commission in Full Session may only set a minimum wage in relation to a declared industry sector if the Minister has by a reference under section 113 asked to set it. An application for the setting of a minimum wage may be made by an employee or group of employee, an employer or group or employers, the Minister or by an association of employers or employee recognised under Part 12.

New section 23 sets out the matters relevant to the level of minimum wages. Those matters include the needs of the workers and their families, the general level of wages, the cost of living economic factors etc. New section 24 provides that the minimum wage is to be expressed as a rate of pay for each hour worked in a working week of 38 hours or of such other number of hours as the Commission determines to be appropriate in the case of the relevant industry sector.

New section 25 provides that minimum terms and conditions of employment are those contained in Schedule 1 of the Act. Subsection (2) makes a provision of an employment agreement of no effect to the extent that it provides a term or condition of employment less favourable than the minimum set out in Schedule 1. New section 26 makes it an offence not to comply with the Schedule 1 minima and sets out a penalty of 100 units. Subsection (2) of new section 26 repeals sub-sections (2) and (3) of section 14. These provisions are redrafted and inserted into new sections 25(1) and (2). Subsection (4) of new section 26 inserts a provision into section 90 which sets out who can apply to bring a matter or dispute before the Commission. This abolishes the current reference to "awards" in section 90. Subsection (4) of new section 26 amends section 98 to provide that only the Commission in Full Session may adjust a minimum wage.

1.7

Clause 7 inserts new provisions relating to the harsh, unjust or unreasonable dismissal of employees. It sets out the eligibility criteria for applications to be made to the Commission. The Committee notes the comments in the Second Reading Speech:-

"The Bill provides for employees with an annual rate of pay exceeding $60,000 to be ineligible to make a claim. This is consistent with the threshold provided for in the Commonwealth industrial relations Act."

The Committee wrote to the Minister asking for a further explanation of clause 7 and the way in which it relates to the Commonwealth provision. The Minister responded by way of a letter dated 3 November 1994. The relevant extract is set out:-

"5.6 _Ż Unfair Dismissals

Jurisdictional Limits

7. The draft Digest quotes Minister Gude from the second reading speech, in relation to the jurisdiction of the ERCV to entertain applications for orders for relief in circumstances of alleged harsh, unjust or unreasonable dismissal, thus:

"The bill provides for employees with an annual rate of pay exceeding $60,000 to be ineligible to make a claim. This is consistent with the threshold provided for in the Commonwealth Industrial Relations Act."

8. The draft Digest goes on to states that, in respect of applications for orders for relief in circumstances of alleged harsh, unjust or unreasonable dismissal pursuant to the Commonwealth Industrial Relations Act 1988 (as amended, "the Commonwealth Act"), that Act - specifically section 170EE (3), as substituted by section 8 of the Industrial Relations Amendment Act (No.2) 1994 (Act no. 97 of 1994, "the Commonwealth Amendment Act"), which commenced operation on 30 June 1994 - "...does not limit applications to a certain salary limit, rather it limits compensation to a certain level."

9. However, I draw to your attention section 170CD of the Commonwealth Act, which was inserted by section 6 of the Commonwealth Amendment Act. This provision appears to have been overlooked by the Committee. I enclose an extract of the Commonwealth Amendment Act for your information.

10. From that extract, you will see that Section 170CD appears in Subdivision A of Division 3 of Part VIA of the Commonwealth Act. That section operates to exclude the operation of Subdivisions following Subdivision A in relation to the termination of employment of employees not employed under an award whose wages exceed $60,000 per annum, which amount is to be indexed in accordance with regulations made under the Commonwealth Act.

11. The Subdivisions following Subdivision A, the operation of which are excluded by section 170CD in the circumstances set out in paragraph 8 above, include Subdivision C - Remedies in respect of unlawful termination. Subdivision C includes, inter alia, section 170EA relating to "Application to Court in Respect of Termination of Employment". Subsection 170EA(1) provides the general entitlement for aggrieved employees to "...apply to the Court for a remedy in respect of termination of his or her employment." The "Court" is the Industrial Relations Court of Australia.

12. Therefore, the provisions of the bill making employees with an annual rate of pay exceeding $60,000 ineligible to bring claim for remedies for harsh, unjust or unreasonable dismissal are, as I said in that part of the second reading speech quoted in the Digest and in paragraph 7 above, "...consistent with the threshold provided for in the Commonwealth Industrial Relations Act."

13. It is true that section 170CD has no application to employees employed under an award of the Australian Industrial Relations Commission ("AIRC"). It is also true that, in respect of such employees (and, it should be said, in respect of employees not employed under such an award, but not excluded by the terms of section 170CD), section 170EE (3) has the effect of limiting the amount of compensation which the Court may award the applicant. However, in examining the issue of consistency between the Commonwealth and Victorian legislative regimes in the context referred to by the Minister, section 170EE is not a relevant consideration.

13. The changes to the law brought about by the Employee Relations Act 1992, and proposed in this bill have the effect that no employee within the Victorian system is employed under an award. For that reason, the relevant comparison is to be made with section 170CD. It is also apposite to point out that the class of employees employed under an award of the AIRC, who nevertheless earn in excess of $60,000, is an extremely limited one."

The Committee also wrote to the Minister requesting clarification of the effect of subclause (1)(b)(i) of clause 7 - an employee is not eligible if he or she has a right of appeal or review under any contract other than in accordance with procedures of the kind referred to in section 14(4)(a) ie: where an employment agreement has the appropriate grievance provision. The Minister responded by way of a letter dated 3 November 1994. The relevant extract is set out:-

"Alternative Rights of Appeal

14. The draft Alert Digest goes on to say that clarification is sought with respect to the matters dealt with in the proposed sub-subclause 39(1)(b)(i), to be incorporated by subclause 7(2) of the bill.

15. The subclause substantially re-enacts clause 39(2)(a) of the Act, which has the effect of excluding the jurisdiction of the ERCV to entertain applications in respect of harsh, unjust or unreasonable dismissal in relation to employees who have:

"...a right of appeal or review under any contract;"

16. The words proposed to be added by the bill have the effect of clarifying the intention of the legislation that, for the exclusion to be operative, the relevant appeal or review rights should be in addition to, and not concurrent with, any dispute settling procedures included in an employment agreement pursuant to the requirements of clause 14(4)(a) of the Employee Relations Act."

Subclause (2) sets out how the total wages are calculated in respect of subsection (1)(a)(1), ie: an employee can only be eligible if the annual rate of pay is less than $60,000.

Clause 8 sets out the general powers of the Commission with respect to arbitration of a dispute or an industrial matter.

Clause 9 inserts a new section 99 which sets out the arbitration powers of the Commission

Clause 10 provides for a Ministerial reference under section 113 to implement a system of industry sectors, work classifications and minimum wages. If the Minister believes it is in the public interest, he or she may ask the Commission to declare the aforementioned matters.

Clause 11 clarifies the minimum terms and conditions of employment which are set out in section 1 of Schedule 1. In particular it inserts a new definition of "minimum wage". It also inserts a new Part 6 into Schedule 1 which sets out the requirements for lawful termination of employment by an employer. The required period of notice is first worked out using the Table in the Schedule. Note that subclause (4) provides that the regulations may prescribe events or other matters which may be disregarded in ascertaining a period of continuous service. Subclause (5) sets out the amount of compensation payable.

CONTINUE browsing Alert Digest No. 12 of 1994