The process of transition to the workplace relations system established by the Fair Work Act 2009 (FW Act) inevitably required complex arrangements for the transitional operation of industrial instruments, including awards, made under previous federal legislation.

These arrangements are principally to be found in the Fair Work (Transitional and Consequential Amendments) Act 2009 (Transition Act), and in a number of decisions of the Australian Industrial Relations Commission (AIRC) in the context of the award modernisation process.

As concerns transition of industrial instruments, the Transition Act and the AIRC addressed three principal issues:

• the continued operation of industrial instruments that had been created, or had their operation continued, under various iterations of the WR Act;

• the transition process for wage rates under transitional instruments to those laid down in modern awards; and

• the phasing-in of entitlements under modern awards where they were more (or less) favourable to employees than those which had applied under the WR Act.

The Transition Act provides that all instruments that operated under the WR Act became ‘transitional instruments’ upon the repeal of that Act with effect from 1 July 2009. These instruments are then divided into two further categories:

• award-based transitional instruments, including federal awards, notional agreements preserving state awards, and Pt 2B state reference transitional awards or common rules (which entered the federal system as a consequence of the referral of legislative powers by the states of New South Wales, Queensland, South Australia and Tasmania); and

• agreement-based transitional instruments, including collective agreements, Australian workplace agreements, Individual Transitional Employment Agreements, workplace determinations, preserved state agreements (individual and collective), pre-2006 certified agreements, pre-1996 agreements, and s 170MX awards (made under the WR Act before the commencement of the Work Choices amendments in 2006).

Detailed provision concerning the transition of transitional instruments is set out in Sch 3 to the Transition Act (with Div 2B state instruments being dealt with in Sch 3A).

In broad terms, transitional instruments continue to have the same coverage as under the WR Act, and to be subject to the same rules as to content and interaction with other transitional instruments as was formerly the case. They can be enforced under Pt 4-1 of the FW Act, have no effect to the extent that they are detrimental to employees when compared to the National Employment Standards, and are displaced by any modern award or enterprise agreement that covers the same employees as the transitional instrument. Once displaced, a transitional instrument can never again cover the employees concerned.

Many of the same principles apply to the transition of agreement-based transitional instruments and award-based transitional instruments.

See Transitional instruments.

As part of the award modernisation process, the AIRC adopted a set of Model Transitional Provisions which deal with the commencement date for modern awards, and address matters such as transitional arrangements, take-home pay, over-award payments and the Fair Work Commission's (FWC) powers to review transitional arrangements. They are based on the assumption that the transitional provisions ‘should generally provide for phasing-in over a 5 year transitional period’.

See Transition process for modern award wage rates.

The phasing-in arrangements established by the AIRC as part of the award modernisation process are set out in a schedule which is attached to most modern awards. Amongst other things, these arrangements deal with the transitional arrangements for ‘rates of pay’, which include entitlements; minimum wages (including junior wages, piecework rates and industry allowances); casual or part-time loadings; Saturday, Sunday, public holiday, evening and other penalty rates; and shift allowances.

An employer who is covered by a modern award may phase-in any increases or decreases in the relevant rate of pay resulting from the commencement of modern awards. This is to be implemented in 5 annual instalments of 20%, commencing on 1 July 2010, so that the process should be complete with effect from 1 July 2014.

The Model Schedule makes detailed provision for calculating the applicable transitional Rate of Pay, while Sch 5 to the Transition Act makes detailed provision which is intended to ensure that employees do not suffer any reduction in their take-home pay in consequence of the transition to modern award coverage.

See Phasing-in arrangements & take-home pay.