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6105.0 - Australian Labour Market Statistics, Jul 2009  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 03/07/2009   
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JURISDICTIONAL COVERAGE


EMPLOYEES IN THE FEDERAL OR STATE WORKPLACE RELATIONS JURISDICTIONS FOR PAY-SETTING


INTRODUCTION

Recent changes to the Australian workplace relations system, through the introduction of the Workplace Relations Amendment (WorkChoices) Act 2005 and more recently the Fair Work Act 2009, have resulted in increasing interest in the jurisdictional coverage of employees, that is, the number of employees in the federal and state workplace relations systems.

Indicative estimates of the proportion of employees in the federal and state workplace relations systems for pay-setting purposes (in May 2006) were provided in an article published in the January 2008 issue of Australian Labour Market Statistics (cat. no. 6105.0). These estimates were based on data collected in the May 2006 Survey of Employee Earnings and Hours (EEH). This article presents updated estimates for August 2008.


THE WORKPLACE RELATIONS ENVIRONMENT

Prior to the introduction of the Workplace Relations Amendment (WorkChoices) Act 2005, employers could essentially choose whether to access federal or state workplace relations systems (i.e. by using a federal or state award, collective or individual agreement to set the pay and conditions of their employees). Alternatively they could choose to negotiate pay and conditions outside of either the federal or state systems (through an unregistered arrangement, e.g. common-law contract). However, following its introduction, employers (and their employees) were deemed to be in the federal jurisdiction if they were within scope of the Workplace Relations Amendment (WorkChoices) Act 2005. This comprises:

  • constitutional corporations (i.e. financial, trading and foreign corporations covered by paragraph 51(xx) of the Constitution);
  • employers and employees in Victoria, ACT, NT and Christmas and Cocos Islands;
  • the Commonwealth, including its authorities; and
  • waterside, maritime and flight crew employers.

The Workplace Relations Amendment (WorkChoices) Act 2005 also included two sets of transitional arrangements. These apply to:
  • constitutional corporations with employees who have their terms of employment set by a state registered agreement or state award; and
  • employers who are not constitutional corporations with employees who have their terms of employment set by a federally registered agreement or federal award.

Employees of constitutional corporations who have their terms of employment set by a state registered agreement or state award, are deemed to be in the federal jurisdiction on a transitional basis (transitioning into the federal jurisdiction). For these employees, the state agreements or awards are deemed to be transitional federal agreements, or Notional Agreements Preserving State Awards (NAPSAs). Employees whose employer is not a constitutional corporation, but who have their terms of employment set by a federal award or federal agreement, are also deemed to be in the federal jurisdiction on a transitional basis (transitioning out of the federal jurisdiction).

The Fair Work Act 2009, which has replaced the Workplace Relations Amendment (WorkChoices) Act 2005, took effect on 1 July 2009. The Fair Work Act 2009 has resulted in considerable changes to the workplace relations system, including the establishment of Fair Work Australia, the introduction of new National Employment Standards, and changes to unfair dismissal provisions. However, like the Workplace Relations Amendment (WorkChoices) Act 2005, the scope of the Fair Work Act 2009 is based primarily on the powers of the constitution. The transitional arrangements within Fair Work Act 2009 also provide for the continued existence of Awards, NAPSAs, and Agreements (including collective/certified agreements, Australian Workplace Agreements, and preserved State agreements) that were in operation immediately before 1 July 2009.

As a result, the framework for analysing workplace relations coverage, and therefore determining the proportion of employees in the federal or state workplace relations jurisdiction, remains essentially unchanged.


JURISDICTIONAL COVERAGE FRAMEWORK

The following diagram provides a framework for identifying which employees are deemed to be under the federal or state workplace relations jurisdictions for pay-setting purposes, based on the status of the employer and the prevailing pay-setting instrument of the employee.

Diagram: Jurisdictional coverage framework

The methodology used to classify employing businesses and employees according to this framework was outlined in an earlier article, Jurisdictional coverage of pay-setting arrangements, which was published in the January 2008 issue of Australian Labour Market Statistics (cat. no. 6105.0).


INDICATIVE ESTIMATES OF JURISDICTIONAL COVERAGE

In August 2008, 78.5% of employees (6.9 million) were in the federal workplace relations jurisdiction and 13% of employees (1.1 million) were in one of the state workplace relations jurisdictions. For 8.6% of employees (900, 000) there was insufficient information to reliably determine which workplace relations jurisdiction they were in.

Between May 2006 and August 2008, federal workplace relations coverage reduced slightly, from 79.1% to 78.5% of employees. There was a corresponding increase in state workplace relations coverage, from 11.9% of employees in May 2006 to 13% of employees in August 2008.

2. Jurisdictional coverage of employees pay-setting arrangements, Indicative estimates

May 2006
Aug 2008
%
%

Federal jurisdiction
Federal award or agreement(a)
36.1
42.0
State award or agreement(b)
9.8
1.3
Unregistered arrangement(c)
28.2
30.2
Federal jurisdiction (excluding Working proprietors of incorporated businesses)
74.0
73.5
Working proprietor of incorporated business
5.1
5.0
Total federal jurisdiction
79.1
78.5
State jurisdiction
State award or agreement
8.8
10.0
Unregistered arrangement(c)
3.2
2.9
Total state jurisdiction
11.9
13.0
Unable to be determined(d)
9.0
8.6
Total
100.0
100.0

(a) Includes employees transitioning out of the federal jurisdiction.
(b) Employees transitioning into the federal jurisdiction.
(c) Includes employees receiving overaward pay.
(d) Employees whose jurisdictional coverage for pay-setting was unable to be determined.
Source: ABS Survey of Employee Earnings and Hours.


Employees in the federal and state jurisdictions can be further distinguished according to whether they are directly or nominally in either the federal or state jurisdiction, or whether they are transitioning into, or out of, the federal jurisdiction (see Figure 1).

The 78.5% of employees in the federal workplace relations jurisdiction at August 2008 comprised:
  • 42% of employees paid by a federal award or agreement. Of these:
      • 37% were directly in the federal jurisdiction (i.e. their employer was in the federal jurisdiction and their pay was set by a federally registered agreement or federal award);
      • 1% were transitioning out of the federal jurisdiction (i.e. their employer was in one of the state jurisdictions but their pay was set by a federally registered agreement or federal award); and
      • 4% had their pay set by federal agreement or federal award but it was not possible to determine whether they were directly in the federal jurisdiction or transitioning out of the federal jurisdiction.
  • 1% transitioning into the federal jurisdiction (i.e. their employer was in the federal jurisdiction but their pay was set by a state registered agreement or state award); and
  • 35% nominally in the federal jurisdiction. Of these:
      • 30% had their pay set by an unregistered arrangement (their employer was in the federal jurisdiction); and
      • 5% were working proprietors of their own incorporated business.

The 13% of employees in the state workplace relations jurisdiction comprised:
  • 10% directly in one of the state jurisdictions (i.e. their employer was in one of the state jurisdictions and their pay was set by a state registered agreement or state award); and
  • 3% nominally in one of the state jurisdictions (i.e. their employer was in one of the state jurisdictions but their pay was set by an unregistered arrangement).

Between May 2006 and August 2008, the proportion of employees directly in the federal workplace relations jurisdiction increased from 31% to 37%. In conjunction with this, the proportion of employees transitioning into the federal workplace relations jurisdiction decreased from almost 10% in May 2006 to just over 1% in August 2008, which indicates that by August 2008, most of the employees who were transitioning into the federal jurisdiction had done so.

Workplace relations coverage varies considerably across the states and territories. With the exception of Victoria, NT and the ACT, which do not have their own workplace relations systems, the state with the highest proportion of employees in the federal workplace relations jurisdiction was NSW (74%). Tasmania had the highest proportion of its employees in the state jurisdiction, with almost a quarter (24%) of Tasmanian employees in the Tasmanian workplace relations jurisdiction.

2. Jurisdictional coverage of employees pay-setting arrangements, States and territories: Indicative estimates - August 2008

NSW
Vic
Qld
SA
WA
Tas
NT
ACT
Australia
%
%
%
%
%
%
%
%
%

Federal jurisdiction
Federal award or agreement(a)
36.5
55.3
35.8
38.0
32.4
43.5
62.9
75.3
42.0
State award or agreement(b)
1.2
-
2.8
2.7
*0.8
*2.6
-
-
1.3
Unregistered arrangement(c)
31.0
39.0
23.1
26.0
27.8
16.3
32.4
21.6
30.2
Federal jurisdiction (excluding Working proprietors of incorporated businesses)
68.7
94.3
61.7
66.7
61.0
62.4
95.5
96.9
73.5
Working proprietor of incorporated business
5.4
5.7
4.0
5.2
4.7
2.7
4.5
3.1
5.0
Total federal jurisdiction
74.1
100.0
65.7
71.9
65.7
65.1
100.0
100.0
78.5
State jurisdiction
State award or agreement
10.4
-
*17.8
17.6
*14.0
*19.5
-
-
10.0
Unregistered arrangement(c)
2.8
-
5.1
4.1
6.2
4.7
-
-
2.9
Total state jurisdiction
13.2
-
22.8
21.7
20.3
*24.3
-
-
13.0
Unable to be determined(d)
12.6
-
11.5
6.4
14.1
10.6
-
-
8.6
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

* estimate is subject to sampling variability too high for most practical purposes
- nil or rounded to zero (including null cells)
(a) Includes employees transitioning out of the federal jurisdiction.
(b) Employees transitioning into the federal jurisdiction.
(c) Includes employees receiving overaward pay.
(d) Employees whose jurisdictional coverage for pay-setting was unable to be determined.
Source: ABS Survey of Employee Earnings and Hours.



FURTHER INFORMATION

For further information, please contact Michael Gerrity on Canberra (02) 6252 5514 or email <m.gerrity@abs.gov.au>.


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