Introduction: Employment contracts, awards and agreements

The following chapters focus on the rights, entitlements and obligations of employees in Victoria. These derive from a wide range of sources, including statutes, awards, collective agreements, individual agreements and the common law.

The most significant statute affecting employment conditions in Australia is the federal Fair Work Act 2009 (Cth) (“FW Act”). The FW Act sets out:

sets out most of the rights and duties of employees and employers;

sets out the procedure for the negotiation and certification of federal agreements; and

among other things, governs the affairs of federally registered unions (together with the Fair Work (Registered Organisations) Act 2009 (Cth)).

This chapter covers a range of topics related to employment conditions, with a particular focus on:

the common law employment contract;

workplace agreements and awards under the WRA and the FW Act;

statutory and common law terms of employment.

The following chapter covers termination of employment, enforcement of entitlements and bullying at work.

Interrelationship between statute, statutory agreements and common law contracts

Terms and conditions of employment contained in legislation, awards or statutory agreements are generally minimum terms and conditions. This means that the parties can agree by contract to, for example, pay more than the minimum for any one or more entitlements in the statute, award or statutory agreement.

A common law contract cannot provide for a lesser term than that contained in a statute, award or statutory agreement. The employer must provide the employee with at least every minimum term or condition in the statute, award or statutory agreement. It is no excuse if the employee was, overall, better off under the common law contract.

Contracts and statutory award and agreement terms and conditions exist side by side, with an employee being entitled to the most beneficial term that applies. For example, the ordinary hours pay in a contract may be the most beneficial term for the employee’s ordinary hours of work, but the award overtime condition may be the most beneficial for overtime work. In those circumstances, the employee is legally entitled to the contractual term for ordinary time work and the award term for overtime work.

History of industrial regulation

Prior to 1992, terms and conditions for employees were largely regulated through state and federal awards made by industrial tribunals (i.e. the Australian Industrial Relations Commission (AIRC)). Employees had to receive, at a minimum, all the terms and conditions in the relevant award. A common law contract for a lesser term or condition than contained in the award would not override the award term or condition.

Federal awards were created as a result of the settlement of interstate industrial disputes.

In 1992 the Victorian Government abolished state awards and created a system of a limited number of minimum statutory entitlements, with all other terms and conditions having to be negotiated between employers and employees. These changes led to unions seeking federal awards to cover employees formerly covered by Victorian state awards and eventually led to the Victorian Government referring certain industrial relations powers to the Commonwealth Parliament.

In 1993 the federal government introduced collective bargaining to the federal system as a mechanism to modify terms and conditions applying to employees in particular workplaces. The objective was to increase the productivity of the business and the potential for employees to gain additional benefits by the creation of a more flexible system of industrial regulation. The bargaining system included a requirement that employees who were to be subject to statutory agreements be at “no disadvantage” overall when their enterprise agreement terms and conditions were compared to the terms and conditions in the underlying award.

In 1996 the federal government introduced the Workplace Relations Act 1996 (Cth) (“WRA”). This Act introduced statutory individual agreements (Australian Workplace Agreements, or AWAs), reduced the involvement of unions in a range of areas and limited the range of matters that could be included in a federal award.

In 2004 an agreement was reached between the federal government and the Victorian Government for the Victorian Government to refer much of its industrial relations powers to the federal parliament. This enabled the AIRC to make federal awards that could apply to all Victorian workers in industries specified in those awards. Victorian employers did not need to be party to an interstate dispute to be covered by a federal award.

The WRA was substantially amended in 2005, largely taking effect on 27 March 2006 (the “Work Choices” amendments). The WRA was mostly repealed and replaced by the Fair Work Act 2009 (Cth); The majority of this Act commenced operation on 1 July 2009.

Victoria

While most states in Australia have retained their own workplace legislation for state public sector and local government employees, in Victoria the government referred its power to deal with industrial matters to the federal parliament by way of the Commonwealth Powers (Industrial Relations) Act 1996 (Vic). Most Victorian employers and employees were covered by the WRA. The Victorian Government referred the power necessary for the FW Act to cover all private and public sector employees and employers in Victoria.

Other legislation also affects working conditions in Victoria, such as the Commonwealth Sex Discrimination Act 1984, Racial Discrimination Act 1975 and Disability Discrimination Act 1992, and the Victorian Equal Opportunity Act 2010, Long Service Leave Act 1992 and Occupational Health and Safety Act 2004.