Guidelines Issued By The Workplace Authority Director On How The "No-Disadvantage" Test Will Be Applied In Assessing Workplace Agreements

The Workplace Authority has now published the Agreement Making and No-Disadvantage Test Policy Guide (Guidelines) which:

• provides advice on the making and operation of workplace agreements under the Transition Act; and

• outlines the policy that the Workplace Authority Director will apply when assessing workplace agreements made after 28 March 2008 under the new "no-disadvantage" test (NDT).

The NDT

Under the Transition Act, every workplace agreement which is made after 28 March 2008 must be assessed by the Workplace Authority Director to ensure that the agreement passes the NDT.

The NDT is a global assessment of whether a workplace agreement results, on balance, in a reduction of an employee/employee's overall terms and conditions of employment when compared to the relevant reference instrument/s (relevant reference instrument/s).

The relevant reference instrument/s will differ depending on the nature of the workplace agreement but could be the relevant collective agreement and/or any relevant general instrument and/or any State or Territory laws that relates to long service leave. For further information on the NDT click here.

The Guidelines

The Guidelines make it clear that in considering whether the workplace agreement meets the NDT:

• the Workplace Authority Director will apply the NDT to each employee who will be covered by a collective agreement. The outcome of the NDT may be different for employees at the same classification level due to variations in the working patterns of employees (which an employer must provide to the Workplace Authority Director as part of the approval process); so that the agreement may pass the NDT for one employee, but fail the NDT in relation to another employee. A collective agreement will not pass the NDT if one of more employees is disadvantaged by the collective agreement ;

• the Workplace Authority Director will carefully consider the mix of terms and conditions contained in the workplace agreement but generally, if a workplace agreement replaces guaranteed terms and conditions in the relevant reference instrument/s with benefits that may or may not be realised during the life of the agreement (for example, contingent benefits such as study leave), the Workplace Authority Director will consider these arrangements to be a reduction in the employee's terms and condition; and

• even if agreements contain "guarantee clauses" or "reconciliation clauses", which require the employer to compare the entitlements under the workplace agreement and those payable under the relevant reference instrument/s and make up any shortfall, these may not of themselves be sufficient to ensure that a workplace agreement passes the NDT.

The Guidelines also provide detail on:

• how the Workplace Authority Director will assess various terms and conditions of employment including rates of pay, allowances, leave, and other common terms and conditions of employment eg superannuation, car parking, study leave and incentive payments;

• the options available to Workplace Authority Director where further information is needed to assess a workplace agreement (including requests for further information and consultation with employees); and

• the possible options available to the Workplace Authority Director and/or the employer where an agreement does not pass the NDT.

A copy of the Guidelines can be found at the following address: www.workplaceauthority.gov.au .

Key implications for your business

The Guidelines highlight the importance that businesses must place, prior to making a workplace agreement, on carefully considering:

• the terms and conditions in the relevant reference instrument/s that would, but for the workplace agreement, apply to each employee to covered by the proposed workplace agreement; and

• whether the workplace agreement results in a reduction in those entitlements, in order to ensure that the workplace agreement will be approved by the Workplace Authority Director.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.