Questions & Answers - Awards

Question:

How do I know which new awards are being introduced that may cover people in my organisation? The Clerical Award was identified early on in a variety of media. But I worry that something will sneak in that I have not been aware of.

Answer:

The list of current modern awards can be found here: http://www.airc.gov.au/awardmod/fullbench/awards.htm. If you navigate around this site you'll find out what other modern awards will be drafted.

Question:

For your information I own a retail business in Queensland and we presently pay our team members under the Retail Award in Queensland.

From January will we be covered by a new Retail Modern Award instead of the current State Retail Award? Will all state awards be covered by the new Modern Awards? And will there be any changes in the rates of pay or will each state or region have their own rates still?

With the new unfair dismissal laws I assume everyone is covered by them and if so what happens with the State IRC systems in particular QLD? If we have a dismissal issue going forward will the new Fair Work Australia be dealing with it?

Answer:

Although it is difficult to be specific without knowing more about the nature of your business, it is likely that from 1 January 2010 your business will be covered by the new General Retail Modern Award, which will replace all state awards. Rates of pay will need to be changed accordingly so that they are in line with the rates of pay in the award.

You can find the General Retail Modern Award at http://www.airc.gov.au/awardmod/awards/general_retail_t.pdf - if this link does not work, go to www.airc.gov.au and use the tabs at the top left to navigate through 'award modernisation' to 'modern awards', 'retail industry', 'modern award'.

Employees who are given notice of termination of employment, or whose employment is actually terminated (whichever is the earlier) after 1 July 2009 are covered by the new unfair dismissal laws. All unfair dismissal applications will be dealt with by Fair Work Australia. The state IRC systems will still have their own minor jurisdictions - you can visit their websites or give them a call for further information.

Question:

The Medical Practitioners Award 2010 comes into effect on 1/01/2010. Does this award cover general practitioners working in general practice and other private businesses? My interpretation is yes - as I believe they would be classified as Medical Pracitioner - non specialist - Community Medical Practitioners. One of our member general practices has been advised by the AMA that this award does not cover private businesses. Some clarification would be helpful.

Answer:

We do not think it covers private practice.

Question:

In the past an employer could offer a flat all up rate for ordinary hours, which include specified allowances and penalties (i.e. $27.00 per hour, well above the award entitlement). For leave purposes, the employer could specify a lower rate, which was still above the award (i.e. 21.00 per hour). This was a combination of the flat rate and award rate scenario. I'm not sure this practice is permitted with the new laws.

Answer:

You can agree on a rate with an employee on the basis that it includes payment for allowances and penalties. However, at any point in time you will need to be able to show that the margin on the base rate is sufficient to compensate for those other non-wage monetary entitlements based on your time and wage records for the employee. Next year you will be able to make an award flexibility agreement which allows you to pay an appropriate above award rate and be exempted from complying with the relevant award provisions regarding penalties and allowances.

Both this year and next annual leave payments are based on the base rate of pay, exclusive of allowances and penalties.

Question:

We have collective agreements that have been extended to 2011 & 2012. I am after confirmation please that the conditions in the new underpinning modern award where more favourable than those in our existing collective agreement will not have any force until the agreements expire or are renegotiated.

Also confirmation please that the conditions of the National Employment Standards if/where more favourable will apply from 1/1/2010.

Answer:

Yes the EBA (and we are assuming that it is a pre Work Choices collective agreement) will prevail over the modern award where there is inconsistency – but otherwise the modern award will underpin the EBA.

Also, the conditions of the National Employment Standards if/where more favourable will apply from 1/1/2010.

Question:

Do you know what modern award (if any at all) will regulate our business under the new award modernisation process? We are a chartered accounting firm.

Answer:

The Clerks- Private Sector award will cover your admin staff. It is also likely that an award will cover your professional IT employees. See modern awards here http://www.airc.gov.au/awardmod/fullbench/awards.htm.

Question:

1. It appears that a couple of our admin staff did not have their ITEAs lodged successfully with the Workplace Authority. All employees commenced with our firm before 1 July 2009. I understand this means that the C&A Award is actually applicable to them rather than the conditions of the ITEA unless we set up an Enterprise Agreement. Is this correct?
2. Until we set up an Enterprise Agreement and have it approved, does this mean that we must pay entitlements under the Award such as leave loading? If so, does this extend from when they started their employment with us (given the ITEA is missing)?
3. Also does the fact that the employees are paid above Award make any difference to our situation or their entitlements under the Award?

Answer:

1. Yes, but you can still make ITEAs until the end of this year.
2. Yes.
3. If you had something in the employment contract or ITEA along the lines of “Your hourly rate includes payment for all loadings, penalties and allowances that you might otherwise be entitled to”, then you may be able to rely on that over award payment, if it is enough after working out actual entitlements based on time and wage records, without having making back pay.

Question:

What will happen to the Vic common rule awards under Fair Work legislation?

Answer:

They will be replaced by modern awards.

Question:

Can high income employees ($108,300+) covered by modern awards opt out of the modern award through a common law agreement?

Answer:

No. The employer needs to give a written guarantee and the employee needs to accept that guarantee. There is a template on the AHRI Fair Work website.

Question:

I heard a new federal award was being introduced for the Information Technology sector which hasn't previously had an award, I would like to know where I can find the details of this award and when it applies from?

Answer:

Modern Awards will apply from 1 January 2010. They will be available to view and download sometime before that date from the fwa.gov.au website. There is likely to be an award covering professional IT employees but we don't know the name of it yet.

Question:

Many small employers (i.e. less than 15 employees) are covered by an award with a less onerous redundancy clause than that under the FW Act. Am I correct in assuming:

1. Award covered employees will be covered by the severance pay provisions in the award (which are less expensive than the award requirements for large employers which equal the entitlements under the FW Act).
2. The award-free employees of small business employers will not be entitled to severance pay (no award or Act entitlement).

Answer:

Yes, for award covered employees of small business employers severance pay is capped at 8 weeks. There is no NES redundancy pay obligation for small business employers.

Question:

I note that part-time employees will be entitled to penalty rates for additional days worked. Can there be an agreement between employer and employee to negate this clause?

Answer:

I assume you are looking at a provision in a modern award that will apply to your business from 1 January 2010 next year (bearing in mind that the AIRC announced that changes to penalties will be phased in in 20% annual increments from 1 July 2010). The modern award will include an award flexibility clause that will allow you to reach an agreement with individual employees that departs from the strict provisions of the award provided that the employee is not disadvantaged in an overall sense (e.g. if you envisage that penalties will be payable on 24 days a year, you could calculate that sum and formulate a loaded up hourly rate, which would avoid the need to pay penalties on the occasion that the additional days are worked).

Question:

Has the implementation of Modern Awards and/or the NES been delayed until the 1st of July, 2010?

Answer:

No, NES and modern awards will commence on 1 January 2010 but any additional obligations to pay more will not commence until 1 July 2010 and then will be phased in 5 equal annual instalments of 20%.

Question:

Our staff are currently on Common Law employment contracts on salaries that take into account the fact that their contract states there is no further remuneration for overtime etc. How do we manage this with the new Sports Award - we cannot afford as an organisation to maintain their current salaries that account for overtime and then have to pay them overtime on top of this. How would we apply the BOOT test here to stop us going out of business?

Answer:

The BOOT test does not apply to common law contracts, but to enterprise agreements. Modern awards are a minimum safety net applicable in particular industries to employees who fall within the award classifications. Accordingly, if your employees fall within the Sports Award classifications, then you must pay them in accordance with the Award. This includes paying them the salary, allowances, penalties and overtime specified in the Award. However, please note that the modern awards are not yet in force and the most recent decision of the AIRC is to the effect that the terms of modern awards will be phased in over a period of 5 years from 1 July 2010. This is to allow employers a period of time in which to align their salaries, terms and conditions of employment with the award.

Question:

Are the modern awards still to become effective from 1 January? I was told this had been delayed to 1 July 2010.

Answer:

The modern awards are still due to come in to operation on 1 January 2010.

Question:

Our employees have employment contracts under the Common Law. There are questions raised regarding the Modern Awards where leave loading is now compulsory even if the employee is not a shift worker. Please confirm.

Answer:

If the employees are covered by a Modern Award which provides for leave loading they will be entitled to it. You will need to check the provisions of the relevant Modern Award.

Question:

I have looked at the modern awards and do not seem to be able to find which award would cover the industry that i work in – retirement villages – any ideas? There are approximately 30 staff employed under common law contracts - do all of these staff (gardening/catering/cleaning/carers) have to be attached to a modern award or can there be one generic agreement struck that is a catch all employment contract that incorporates all of the minimum conditions required?

Answer:

A retirement village may come under the Aged Care Modern Award, which covers work performed in a retirement village including gardening, food services, cleaning, laundry services, personal carers and clerical employees (e.g. receptionists). You can reach a collective agreement with your employees, which covers all categories of employment. The agreement would be based on a Modern Award or if there is no relevant Modern Award, the minimum standards (currently the Fair Pay and Conditions Standard, and as of 1 January 2010 the NES). There are instructions outlining how to make and lodge a collective agreement on the fairwork.gov.au website and this website.

Question:

I have looked at the modern awards and do not seem to be able to find which award would cover the industry that i work in – retirement villages – any ideas? There are approximately 30 staff employed under common law contracts - do all of these staff (gardening/catering/cleaning/carers) have to be attached to a modern award or can there be one generic agreement struck that is a catch all employment contract that incorporates all of the minimum conditions required?

Answer:

A retirement village may come under the Aged Care Modern Award, which covers work performed in a retirement village including gardening, food services, cleaning, laundry services, personal carers and clerical employees (e.g. receptionists). You can reach a collective agreement with your employees, which covers all categories of employment. The agreement would be based on a Modern Award or if there is no relevant Modern Award, the minimum standards (currently the Fair Pay and Conditions Standard, and as of 1 January 2010 the NES). There are instructions outlining how to make and lodge a collective agreement on the fairwork.gov.au website and this website.

Question:

I would like to question a matter on the Modern Awards that come into effect in 2010. I work in the not-for-profit sector where salary packaging for both fringe benefits and superannuation are provided as part of total salary. I have been told but cannot substantiate, that the Modern Awards do not provide for salary packaging. Are you able to offer comments about this?

Answer:

You will need to find the relevant Modern Award, if any is applicable, and check its contents. However, most do not contain provisions dealing with salary packaging. Accordingly, it is a matter to be dealt with between the employer and employee at the employer's discretion.

Question:

Will employees previously covered by State awards i.e. the Clerical & Admin award and Storeman and Packers award now fall under a Federal Modern award applicable to the industry they work in?

Answer:

If employed in Victoria, the answer to this is yes. If employed in other States, the answer will depend on whether the employer is a constitutional corporation covered by the Federal System. If the employer is a constitutional corporation, again the answer will be yes.

Question:

Phasing in award conditions - we do not currently pay annual leave loading. It is not one of the penalties/loadings mentioned, but it is a loading. Are we able to phase in annual leave loading?

Answer:

The answer depends on the content of the relevant Modern Award. Some Modern Awards expressly contain phasing in provisions, e.g. over a 5 year period, while others do not.

Question:

Currently we have common law contracts for all staff, including our professional engineers and scientists. Would I be correct in assuming that the new modern award for Professional Employees would apply to them? But is this only up to the first level supervisors? Do we need to reissue contracts to all existing staff mentioning the modern awards and NES? Am I correct in stating that second level managers and higher level managers would not be subject to the Professional Employees modern award?

Answer:

Assuming that you do not have enterprise agreements in place, the Award will apply to your professional engineers and scientists. You are correct in your view that the award is meant only to apply up to the first tier of supervisory staff. More senior staff will not be subject to the Award as framed presently.

You are not required at law to issue new contracts of employment. However, you should carefully review your existing contracts of employment and pro forma contracts for new staff to ensure that they are consistent with the provisions of the Fair Work Act. If they are not and they are less beneficial, the Fair Work Act will apply in any event. However, in our experience, it makes things easier from an administrative and HR perspective to have employment contracts that either reflect the current state of the law or are more general in their application (eg. "You will be entitled to annual leave in accordance with the relevant legislation as may be in force from time to time").

Question:

How do modern awards effect employees who are not under any awards currently and are below the $108,300 salary mark? Do they also need to be aligned to an industry - occupation award going forward by way of reissuing new contract or kind? Similarly, do we need to assign all new hired non – managerial employees below the $108,300 salary amount to an award from 1st January 2010 - which were previously covered under a individual common law contract?

Answer:

Employees who are currently award free may become covered by a modern award if the work they do falls within the classifications of a modern award. You can review the modern awards at www.airc.gov.au to check.

If their work is not specifically covered by an industry modern award it is possible that they may come within an 'industry not otherwise assigned' award. However, the award modernisation process is intended to pick up most federal system employees - it is largely a matter of checking to see which modern award covers relevant employees.

You do not need to assign employees to an industry or issue new contracts to them - they will become automatically covered by the award and you will have to apply those award conditions to them. This also applies to new hired non-managerial employees on individual common law contracts (the modern award will apply to the extent of any inconsistency). However, we recommend that you review your standard contracts of employment to ensure that they are consistent with relevant modern awards and the new national employment standards.

Question:

I cannot find a Modern Award that covers marketing employees and business development managers (sales). Has a Modern Award for these roles not been released yet, or will they come under the general award that covers all employees not covered by any other Modern Award?

Answer:

It depends on the nature of your business. However, having reviewed the current list of modern awards, there are two which might be relevant. These are the Commercial Sales Award, which covers employers throughout Australia with respect to Commercial Travellers, Merchandisers and Advertising Sales Representatives and their employees, and/or the Clerks Private Sector Award depending on the amount of administrative work the employees perform.

Given that modern awards are yet to be finalised (they come into operation on 1 January 2010) there is a possibility that a more relevant award, applicable to your business, will still be released.

For further details please see www.fwa.gov.au or contact FWA on 1300 799 675.

Question:

For employees who were previously award free, to calculate the transitional award rates of pay, is the minimum federal wage the 'transitional minimum wage instrument'?

Answer:

On 1 January 2010, federal system employees who were previously award free and who become bound by the relevant Modern Award will be entitled to receive the minimum rate of pay set out in that Modern Award.

However, because they were award free their employer can apply the transitional rates of pay calculated on the basis set out in the relevant section of the Modern Award, usually in Schedule A of a Modern Award.

The transitional rates of pay for previously award-free employees are based on the minimum rates set out in the Modern Award (or as changed by orders of the Minimum Wage Panel of Fair Work Australia from time to time) and are set at percentages of the minimum rate, which percentages increase annually from 2010 to 1 July 2014 when the full rate will be payable.

Question:

Can you please advise as to whether employers that have common law contracts, with the award sitting behind this, still need to draft and get agreement to an Individual Flexibility Arrangement as per the modern awards and the requirement under FWA?

Answer:

If your employee is covered by a modern award (which will be the case even if the employee has a common law contract, unless the employee has a guarantee of annual earnings), you will need to comply with the terms of the particular modern award in relation to making an individual flexibility arrangement.

Under section 144 of the Fair Work Act 2009 (FW Act), each modern award must include a flexibility term which enables an employee and their employer to make an individual flexibility arrangement. The effect of, and requirements for, the flexibility term in modern awards are also found in section 144 of the FW Act.

Question:

As a wholesale bakery, I am of the opinion that the company will be under the Food, Beverage & Tobacco Award. Can you tell me what the % for the Night Shift penalty rates will be and the hours that they will take effect?

Answer:

Assuming you are referring to the Food, Beverage and Tobacco Manufacturing Award 2010, the answer to your question will depend on how many night shifts the employee works in a specified time. A night shift is defined at paragraph 31 as a shift finishing after midnight or at / before 8am. However, the penalty rate will vary according to the sequence, number of shifts worked and whether the night shift was worked over a weekend. This is set out at paragraph 31 which deals with shift workers.

Question:

Recently I was reading through the Health Professionals & Support Services Award 2010 and was wondering what the definition was for a 'day worker'? Also confused by Clause 24.1 & 24.2 - Span of Hours. We have a Certified Agreement and run a Private Medical & Dental Practice (Mon - Sun) and also a 24Hr Bulk Billing Medical Practice. I'm currently trying to work out the new pay rates and penalties

Answer:

The meaning of 'day worker' in the Health Professionals and Support Services Award 2010 (Award) comes from clause 24 (Span of Hours). Under clause 24.1, the span of hours for a day worker is 6am to 6pm Monday to Friday, unless stated otherwise. Clause 24.2 provides that if a day worker is employed by a private medical, dental or pathology practice (such as yours) the span of hours will be between 7.30am and 9.00pm Monday to Friday, and between 8.00am and 4.30pm on Saturday.

Penalty rates and overtime may also be payable to day workers in accordance with other clauses contained in the Award (such as clause 26, which relates to Saturday and Sunday work).

You will need to undertake a detailed comparison between the terms and conditions of your Certified Agreement and the Award to determine the pay rates and penalties payable to your employees from 1 January 2010. This is something we recommend you get independent advice about.

Question:

Recently I was reading through the Health Professionals & Support Services Award 2010 and was wondering what the definition was for a 'day worker'? Also confused by Clause 24.1 & 24.2 - Span of Hours. We have a Certified Agreement and run a Private Medical & Dental Practice (Mon - Sun) and also a 24Hr Bulk Billing Medical Practice. I'm currently trying to work out the new pay rates and penalties

Answer:

The meaning of 'day worker' in the Health Professionals and Support Services Award 2010 (Award) comes from clause 24 (Span of Hours). Under clause 24.1, the span of hours for a day worker is 6am to 6pm Monday to Friday, unless stated otherwise. Clause 24.2 provides that if a day worker is employed by a private medical, dental or pathology practice (such as yours) the span of hours will be between 7.30am and 9.00pm Monday to Friday, and between 8.00am and 4.30pm on Saturday.

Penalty rates and overtime may also be payable to day workers in accordance with other clauses contained in the Award (such as clause 26, which relates to Saturday and Sunday work).

You will need to undertake a detailed comparison between the terms and conditions of your Certified Agreement and the Award to determine the pay rates and penalties payable to your employees from 1 January 2010. This is something we recommend you get independent advice about.

Question:

How does the concept of "Guarantee of annual earnings" work? My company wants to reduce staff hours and pro rata pay accordingly as our work from clients has dried up and we don’t want to terminate any employees?

Answer:

A guarantee of annual earnings will only be relevant if:

• an employee is covered by a modern award;
• is a high income employee (currently defined as earning over approximately $108,300 per year, pro rated for non-full time employees); and
• an employer has given the employee an undertaking in writing to pay the employee an amount over a period of 12 months or more, which amount is higher than the high income threshold.

As modern awards do not commence operation until 1 January 2010, although you could enter in to a written guarantee now, it would only take effect on and from that date.

However, if you are reducing employees’ hours there may be significant and specific legal consequences which could give rise to liability for the company. In particular, you can not do so without an employee's consent. If you do so without consent, the employee may bring a claim for termination of employment and seek payments for notice and redundancy (if relevant). We suggest that you seek formal legal advice before taking any such steps.

Question:

Is it true that if a Company did not employ anyone before March 2006, their current employees are only covered by the standard items within the relevant award and all other items such as overtime, allowances, penalties, meal breaks etc are not covered by any award?

Answer:

No, it depends on the content of a relevant award though, but that would be unusual. If an employee, for example, was employed to do clerical work in Victoria on and from 2007, he or she would be covered by the State Clerical and Administrative Employees Award, but there are modified provisions about how, for example, redundancy payments are to be calculated.

Question:

The modern awards have been varied with clause “the monetary obligations imposed on employers by this award may be absorbed into overaward payments”. Does this mean where we pay an overaward payment we can absorb the entitlement to annual leave loading and other allowances not currently paid by our organisation?

Answer:

Yes, but you should include a line in your contracts of employment stating that your rate of pay compensated you for any loading, overtime payment, penalty or other amount to which you would otherwise be entitled under any industrial instrument. You will then need to carefully scrutinise payments to employees to ensure that they are sufficiently high to absorb such entitlements.

Question:

Modern Award Coverage: Will manager's with the ability to hire/fire employees currently earning less than the threshold amount of $108,300 be covered by Modern Awards? Example: A retail sales manager or a centre manager that looks after a commercial center?

Answer:

A modern award will cover a retail sales manager or centre manager if these positions fall within a classification set out in a modern award. To determine this, you will need to look at the duties of each of these positions and decide whether they fall within the scope of a classification under one of the modern awards, which can be found here: http://www.airc.gov.au/awardmod/fullbench/awards.htm (However, please note that there are still some modern awards to be completed and posted on this website). We recommend that you have a look at the General Retail Industry Award 2010 in particular.

However, even if a modern award "covers" these employees, it will not apply to them if an enterprise agreement or an agreement for guaranteed annual earnings applies to them in accordance with the Fair Work Act 2009.