The Workplace Authority has also published its Fairness Test Policy Guide, along with the first of a set of practical examples to help communicate how the new Fairness Test works in practice.
The policy guide states that the fairness test only applies when:
• An agreement is lodged on or after May 2007. It will not affect agreements lodged before this date. However, where an agreement (including one made before 7 May 2007) is varied, the whole agreement will be subject to the fairness test if the variation excludes or modifies any protected award conditions.
• The Employee works in an industry or occupation where an award applies or would usually apply to the kind of work performed. There may be certain circumstances where if there is no relevant award, the Workplace Authority is able to designate a federal award for the purposes of the fairness test.
• The annual full time or full time equivalent salary is less than $75 000 (this applies to AWA’s only, there is no monetary threshold for collective agreements). This includes – a gross basic salary of $75000 and excludes incentive based payments and bonuses, loadings (other than casual loadings), penalty rates, monetary allowances, employer superannuation contribution or any other distinct entitlement which is similar to an incentive based payment/bonus, loadings, penalty rates or monetary allowances.
• The AWA or collective agreement expressly excludes or modifies one or more protected conditions.
Where the compensation that is provided equals or exceeds the value of the relevant protected conditions that have been modified or excluded, the agreement meets the fairness test. The primary concern when examining an agreement is the level of money and monetary compensation.
Other circumstances such as the employees personal circumstances such as family responsibilities and in exceptional circumstances the industry, location or economic circumstances of the employer and the employment circumstances of the employee, may be taken into consideration.
Should the agreement not meet the fairness test, Workplace Authority will provide advice to the parties as to how the agreement can be altered to meet the requirements of the test. The jury is out as to whether the fairness test is an effective safety net, as the principles are yet to be tested. The legislation seems
to provide employees with protection, in terms of certain conditions in their employment contracts. However, time will tell as to whether these changes are effective. For further information, the Fairness Test Policy Guide can be accessed on the internet at: https://www.fairwork.gov.au/tools-and-resources/best-practice-guides